As filed with the Securities and Exchange Commission on July 29, 1998.
File No. 33-8982
ICA No. 811-4852
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. _____ [ ]
Post-Effective Amendment No. 42 [X]
and
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 43
The Victory Portfolios
(Exact name of Registrant as Specified in Trust Instrument)
3435 Stelzer Road
Columbus, Ohio 43219
(Address of Principal Executive Office)
(800) 362-5365
(Area Code and Telephone Number)
Copy to:
Michael J. Sullivan Carl Frischling, Esq.
BISYS Fund Services Kramer, Levin, Naftalis & Frankel
3435 Stelzer Road 919 Third Avenue
Columbus, Ohio 43219 New York,New York 10022
(Name and Address of Agent for Service)
It is proposed that this filing will become effective:
[ ] Immediately upon filing pursuant to [X] on August 28, 1998 pursuant to
paragraph (b) paragraph (b)
[ ] 60 days after filing pursuant to [ ] on (date) pursuant to
paragraph (a)(1) paragraph (a)(1)
[ ] 75 days after filing pursuant to [ ] on (date) pursuant to
paragraph (a)(2) paragraph (a)(2) of rule 485.
If appropriate, check the following box:
[X] this post-effective amendment designates a new effective date for a
previously filed post- effective amendment.
<PAGE>
THE VICTORY PORTFOLIOS
CROSS-REFERENCE SHEET
THE VICTORY PORTFOLIOS
Item Number
Form N-1A
Part A Prospectus Caption
------ ------------------
The Registrant has filed the information required in the prospectuses in the
Post-Effective Amendment No. 39 to its Registration Statement on Form N-1A on
April 29, 1998, (accession number 0000922423- 98-000431) and is hereby
incorporated by reference. The Registrant has not amended its prospectuses.
1. Cover Page Cover Page; Introduction
2. Synopsis Fund Expenses
3. Condensed Financial Information Inapplicable
4. General Description of Registrant Introduction; AN OVERVIEW OF
EACH OF THE FUNDS; Risk
Factors; Investment Limitations;
Additional Information
5. Management of the Fund Organization and Management of
the Fund
5.A.Management's Discussion of Fund Investment Performance
Performance
6. Capital Stock and Other Securities INVESTING WITH VICTORY: How to
Purchase Shares, How to
Exchange Shares, How to Redeem
Shares; Dividends,
Distributions and Taxes;
Organization and Management of
the Funds; Additional
Information; Other Securities
and Investment Practices
7. Purchase of Securities Being Offered How to Purchase Shares; How to
Exchange Shares
8. Redemption or Repurchase How to Exchange Shares; How to
Redeem Shares
9. Pending Legal Proceedings Inapplicable
<PAGE>
THE VICTORY PORTFOLIOS
CROSS REFERENCE SHEET
THE VICTORY PORTFOLIOS
Item Number
Form N-1A Statement of Additional
Part B Information Caption
The Registrant has filed the information required in the statement of additional
information in the Post-Effective Amendment No. 39 to its Registration Statement
on Form N-1A on April 29, 1998, (accession number 0000922423-98-000431) and is
hereby incorporated by reference. The Registrant has not amended its statement
of additional information.
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and History Additional Information
13. Investment Objectives and Policies Investment Objectives
and Investment Policies
and Limitations
14. Management of the Fund Trustees and Officers
15. Control Persons and Principal Additional Information
Holders of Securities
16. Investment Advisory and Other Advisory and Other Contracts
Services
17. Brokerage Allocation and Other Practices Advisory and Other Contracts
18. Capital Stock and Other Securities Valuation of Portfolio
Securities; Additional
Purchase, Exchange and
Redemption Information;
Additional Information
19. Purchase, Redemption and Pricing Valuation of Portfolio
of Securities Being Offered Securities; Additional
Purchase, Exchange and
Redemption Information;
Performance of the
Funds; Additional
Information
20. Tax Status Dividends and Distributions;
Taxes
21. Underwriters Advisory and Other Contracts
22. Calculation of Performance Data Performance of Funds;
Additional Information
<PAGE>
THE VICTORY PORTFOLIOS
23. Financial Statements Inapplicable
Part C
Information required to be included in Part C is set forth under the appropriate
Item, so numbered, in Part C of the Registration Statement.
<PAGE>
THE VICTORY PORTFOLIOS
EXPLANATORY NOTE
THE PURPOSE OF THIS FILING IS SOLEY TO DESIGNATE A NEW EFFECTIVE DATE FOR
POST-EFFECTIVE AMENDMENT NO. 39 TO REGISTRATION STATEMENT ON FORM N-1A OF THE
REGISTRANT AND TO FILE CURRENT EXHIBITS TO THE REGISTRANT'S REGISTRATION
STATEMENT. THE PROSPECTUSES AND STATEMENT OF ADDITIONAL INFORMATION FOR EACH
FUND SUBJECT TO SUCH POST-EFFECTIVE AMENDMENT HAVE NOT BEEN AMENDED AND ARE
INCORPORATED BY REFERENCE HEREIN IN THEIR ENTIRETY.
<PAGE>
THE VICTORY PORTFOLIOS
Registration Statement
of
THE VICTORY PORTFOLIOS
on
Form N-1A
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
Included in Part A: None.
Included in Part B: None.
(b) Exhibits:
EX-99.B1 Delaware Trust Instrument dated December 6, 1995, as amended.(9)
EX-99.B2 By-Laws adopted December 6, 1995.(1)
EX-99.B3 None.
EX-99.B4 None.
EX-99.B5 (a) Investment Advisory Agreement dated as of March 1, 1997 between
the Registrant and Key Asset Management Inc, with Schedule A
amended as of March 2, 1998 and May 29, 1998.(13)
(b) Investment Advisory Agreement dated March 1, 1997 between the
Registrant and Key Asset Management Inc. regarding Lakefront Fund
and Real Estate Investment Fund.(6)
(c) Investment Sub-Advisory Agreement dated March 1, 1997 between Key
Asset Management Inc. and Lakefront Capital Investors, Inc.
regarding the Lakefront Fund. (6)
(d) Investment Advisory Agreement dated June 1, 1998 between the
Registrant and Key Asset Management Inc. regarding the
International Growth Fund.(13)
(e) Portfolio Management Agreement dated June 1, 1998 between the Key
Asset Management Inc. and IndoCam International Services, S.A.
regarding the International Growth Fund.(12)
<PAGE>
THE VICTORY PORTFOLIOS
EX-99.B6 (a) Distribution Agreement dated June 1, 1996 between the
Registrant and BISYS Fund Services Limited Partnership, with
Schedule I amended as of March 2, 1998 and May 29, 1998.(13)
(b) Form of Broker-Dealer Agreement.(2)
EX-99.B7 None.
EX-99.B8 (a) Amended and Restated Mutual Fund Custody Agreement dated August
1, 1996, with Schedule A revised as of March 1998 and May 29,
1998 and Attachment B revised as of March 2, 1998.(13)
(b) Custody Agreement dated May 31, 1996 between Morgan Stanley Trust
Company and Key Trust Company of Ohio. (3)
EX-99.B9 (a) Administration Agreement dated October 1, 1997 between the
Registrant and BISYS Fund Services Limited Partnership, with
Schedule I amended as of March 2, 1998 and May 29, 1998 and
Schedule II-B amended as of March 2, 1998. (13)
(b) Sub-Administration Agreement dated October 1, 1997 between BISYS
Fund Services Limited Partnership d/b/a BISYS Fund Services and
Key Asset Management Inc., with Schedule A amended as of March 2,
1998 and May 29, 1998.(13)
(c) Transfer Agency and Service Agreement dated July 12, 1996 between
the Registrant and State Street Bank and Trust Company, with
Schedule A revised as of August 1, 1996 , March 2, 1998 and May
29, 1998.(13)
(d) Fund Accounting Agreement dated May 31, 1995 between the
Registrant and BISYS Fund Services Ohio, Inc., with Amended
Schedule A as of February 19, 1997 and March 2, 1998, and May 29,
1998 and Schedule B as of March 2, 1998.(13)
(e) Shareholder Servicing Plan dated June 5, 1995 with Schedule I
amended as of March 2, 1998 and May 29, 1998.(13)
(f) Form of Shareholder Servicing Agreement.(1)
EX-99.B10 (a) Opinion of Counsel was filed with Registrant's Rule 24f-2 Notice
in respect of the period ending October 31, 1996, submitted
electronically on December 23, 1996, accession number
0000950152-96-006841.
EX-99.B10 (b) Opinion of Kramer, Levin, Naftalis & Frankel as to the legality
of the securities registered.(14)
EX-99.B11 (a) Consent of Kramer, Levin, Naftalis & Frankel. (13)
C-2
<PAGE>
THE VICTORY PORTFOLIOS
(b) Consent of PricewaterhouseCoopers LLP.(13)
EX-99.B12 None.
EX-99.B13 (a) Purchase Agreement dated November 12, 1986 between Registrant and
Physicians Insurance Company of Ohio is incorporated herein by
reference to Exhibit 13 to Pre-Effective Amendment No. 1 to the
Registrant's Registration Statement on Form N-1A filed on
November 13, 1986.
(b) Purchase Agreement dated October 15, 1989 is incorporated herein
by reference to Exhibit 13(b) to Post-Effective Amendment No. 7
to the Registrant's Registration Statement on Form N-1A filed on
December 1, 1989.
(c) Purchase Agreement is incorporated herein by reference to Exhibit
13(c) to Post-Effective Amendment No. 7 to the Registrant's
Registration Statement on Form N- 1A filed on December 1, 1989.
EX-99.B14 None.
EX-99.B15 (a) Distribution and Service Plan dated June 5, 1995 for the Class A
Shares of the Registrant with Schedule I amended as of February
19, 1997 , March 2, 1998 and May 29, 1998.(13)
(b) Distribution Plan dated June 5, 1995 for Class B Shares of the
Registrant with Schedule I amended as of February 1, 1996.(12)
EX-99.B16 (a) Forms of computation of performance quotation are incorporated
herein by reference to Exhibit 16 to Post-Effective Amendment No.
19 to the Registrant's Registration Statement on Form N-1A filed
on December 23, 1994.
(b) Forms of computation of performance quotation for the Class B
shares of the Balanced Fund, Diversified Stock Fund,
International Growth Fund, Ohio Regional Stock Fund and Special
Value Fund.(4)
(c) Forms of computation of performance quotation for the Lakefront
Fund and U.S. Government Obligations Fund - Investor Shares.(5)
(d) Computation of performance quotation for the Real Estate
Investment Fund.(7)
(e) Computation of performance quotation for U.S. Government
Obligations Fund -Investor Shares.(9)
EX-99.B17 None.
EX-99.B18 Amended and Restated Rule 18f-3 Multi-Class Plan as of
December 3, 1997.(11)
C-3
<PAGE>
THE VICTORY PORTFOLIOS
EX-99.B19 (a) Powers of Attorney of Roger Noall and Frank A. Weil.(8)
(b) Powers of Attorney of Leigh A. Wilson, Edward P. Campbell, Harry
Gazelle, Thomas F. Morrissey, H. Patrick Swygert and Eugene J.
McDonald. (9)
- --------------------------------
(1) Filed as an Exhibit to Post-Effective Amendment No. 26 to the Registrant's
Registration Statement on Form N-1A filed electronically on December 28,
1995, accession number 0000950152-95-003085.
(2) Filed as an Exhibit to Post-Effective Amendment No. 27 to the Registrant's
Registration Statement on Form N-1A filed electronically on January 31,
1996, accession number 0000922423-96-000047.
(3) Filed as an Exhibit to Post-Effective Amendment No. 30 to the Registrant's
Registration Statement on Form N-1A filed electronically on July 30, 1996,
accession number 0000922423-96-000344.
(4) Filed as an Exhibit to Post-Effective Amendment No. 31 to the Registrant's
Registration Statement on Form N-1A filed electronically on February 7,
1997, accession number 0000922423-97-000066.
(5) Filed as an Exhibit to Post-Effective Amendment No. 32 to the Registrant's
Registration Statement on Form N-1A filed electronically on June 27, 1997,
accession number 0000922423-97-000530.
(6) Filed as an Exhibit to Post-Effective Amendment No. 34 to the Registrant's
Registration Statement on Form N-1A filed electronically on December 12,
1997, accession number 0000922423-97-001015.
(7) Filed as an Exhibit to Post-Effective Amendment No. 35 to the Registrant's
Registration Statement on Form N-1A filed electronically on December 17,
1997, accession number 0000922423-97-001022.
(8) Filed as an Exhibit to Pre-Effective Amendment No. 2 to the Registrant's
Registration Statement on Form N-14 filed electronically on February 3,
1998, accession number 0000922423-98-000095.
(9) Filed as an Exhibit to Post-Effective Amendment No. 36 to the Registrant's
Registration Statement on Form N-1A filed electronically on February 26,
1998, accession number 0000922423-98-000264.
(10) Filed as an Exhibit to Post-Effective Amendment No. 38 to the Registrant's
Registration Statement on Form N-1A filed electronically on March 31, 1998,
accession number 0000922423-98-000358.
(11) Filed as an Exhibit to Post-Effective Amendment No. 1 to the Registrant's
Registration Statement on Form N-14 filed electronically on June 9, 1998,
accession number 0000922423-98-000589.
(12) Filed as an Exhibit to Post-Effective Amendment No. 40 to the Registrant's
Registration Statement on Form N-1A filed electronically on June 12, 1998,
accession number 0000922423-98-000602.
(13) Filed herewith.
(14) To be filed by amendment.
Item 25. Persons Controlled by or Under Common Control with Registrant.
None.
Item 26. Number of Holders of Securities.
As of April 30, 1998 the number of record holders of each Fund of the Registrant
were as follows:
Number of
Title of Fund Record Holders
------------- --------------
Balanced Fund
Class A Shares 1,478
Class B Shares 362
Diversified Stock Fund
Class A Shares 15,416
Class B Shares 4,253
C-4
<PAGE>
THE VICTORY PORTFOLIOS
Financial Reserves Fund 144
Fund For Income 1,709
Government Mortgage Fund 332
Growth Fund 612
Intermediate Income Fund 380
International Growth Fund
Class A Shares 1,403
Class B Shares 67
Institutional Money Market Fund
Select Class Shares 30
Investor Class Shares 53
Investment Quality Bond Fund 2,623
Lakefront Fund 75
Limited Term Income Fund 622
National Municipal Bond Fund
Class A Shares 1,636
Class B Shares 81
New York Tax-Free Fund
Class A Shares 595
Class B Shares 111
Ohio Municipal Bond Fund 427
Ohio Municipal Money Market Fund 154
Ohio Regional Stock Fund
Class A Shares 1,278
Class B Shares 137
Prime Obligations Fund 1,323
Real Estate Investment Fund 229
Special Growth Fund 778
Special Value Fund
Class A Shares 5,219
Class B Shares 294
Stock Index Fund 1,571
C-5
<PAGE>
THE VICTORY PORTFOLIOS
Tax Free Money Market Fund 97
U.S. Government Obligations Fund
Select Class Shares 406
Investor Class Shares 128
Value Fund 322
Federal Money Market Fund
Investor Class Shares 674
Select Class Shares 16
Convertible Securities Fund 1,463
LifeChoice Conservative Investor Fund 17
LifeChoice Moderate Investor Fund 26
LifeChoice Growth Investor Fund 42
Maine Municipal Bond Fund (Intermediate) 0
Maine Municipal Bond Fund (Short-Term) 0
Michigan Municipal Bond Fund 0
Equity Income Fund 0
National Municipal Bond Fund (Short-Intermediate) 0
National Municipal Bond Fund (Long) 0
Item 27. Indemnification
Article X, Section 10.02 of the Registrant's Delaware Trust
Instrument, as amended, incorporated herein as Exhibit 99.B1 hereto,
provides for the indemnification of Registrant's Trustees and
officers, as follows:
"SECTION 10.02 INDEMNIFICATION.
(a) Subject to the exceptions and limitations contained in
Subsection 10.02(b):
(i) every person who is, or has been, a Trustee or officer of the
Trust (hereinafter referred to as a "Covered Person") shall be
indemnified by the Trust to the fullest extent permitted by law
against liability and against all expenses reasonably incurred or paid
by him in connection with any claim, action, suit or proceeding in
C-6
<PAGE>
THE VICTORY PORTFOLIOS
which he becomes involved as a party or otherwise by virtue of his
being or having been a Trustee or officer and against amounts paid or
incurred by him in the settlement thereof;
(ii) the words "claim," "action," "suit," or "proceeding" shall
apply to all claims, actions, suits or proceedings (civil, criminal or
other, including appeals), actual or threatened while in office or
thereafter, and the words "liability" and "expenses" shall include,
without limitation, attorneys' fees, costs, judgments, amounts paid in
settlement, fines, penalties and other liabilities.
(b) No indemnification shall be provided hereunder to a Covered
Person:
(i) who shall have been adjudicated by a court or body before
which the proceeding was brought (A) to be liable to the Trust or its
Shareholders by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct
of his office or (B) not to have acted in good faith in the reasonable
belief that his action was in the best interest of the Trust; or
(ii) in the event of a settlement, unless there has been a
determination that such Trustee or officer did not engage in willful
misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office, (A) by the court or
other body approving the settlement; (B) by at least a majority of
those Trustees who are neither Interested Persons of the Trust nor are
parties to the matter based upon a review of readily available facts
(as opposed to a full trial-type inquiry); or (C) by written opinion
of independent legal counsel based upon a review of readily available
facts (as opposed to a full trial-type inquiry).
(c) The rights of indemnification herein provided may be insured
against by policies maintained by the Trust, shall be severable, shall
not be exclusive of or affect any other rights to which any Covered
Person may now or hereafter be entitled, shall continue as to a person
who has ceased to be a Covered Person and shall inure to the benefit
of the heirs, executors and administrators of such a person. Nothing
contained herein shall affect any rights to indemnification to which
Trust personnel, other than Covered Persons, and other persons may be
entitled by contract or otherwise under law.
(d) Expenses in connection with the preparation and presentation of a
defense to any claim, action, suit or proceeding of the character
described in Subsection (a) of this Section 10.02 may be paid by the
Trust or Series from time to time prior to final disposition thereof
upon receipt of an undertaking by or on behalf of such Covered Person
that such amount will be paid over by him to the Trust or Series if it
is ultimately determined that he is not entitled to indemnification
under this Section 10.02; provided, however, that either (i) such
Covered Person shall have provided appropriate security for such
undertaking, (ii) the Trust is insured against losses arising out of
any such advance payments or (iii) either a majority of the Trustees
who are neither Interested Persons of the Trust nor parties to the
matter, or independent legal counsel in a written opinion, shall have
determined, based upon a review of readily available facts (as opposed
to a trial-type inquiry or full investigation), that there is reason
to believe
C-7
<PAGE>
THE VICTORY PORTFOLIOS
that such Covered Person will be found entitled to indemnification
under this Section 10.02."
Indemnification of the Fund's principal underwriter, custodian, fund
accountant, and transfer agent is provided for, respectively, in
Section V of the Distribution Agreement incorporated by reference as
Exhibit 6(a) hereto, Section 28 of the Custody Agreement incorporated
by reference as Exhibit 8(a) hereto, Section 5 of the Fund Accounting
Agreement incorporated by reference as Exhibit 9(d) hereto, and
Section 7 of the Transfer Agency Agreement incorporated by reference
as Exhibit 9(c) hereto. Registrant has obtained from a major insurance
carrier a trustees' and officers' liability policy covering certain
types of errors and omissions. In no event will Registrant indemnify
any of its trustees, officers, employees or agents against any
liability to which such person would otherwise be subject by reason of
his willful misfeasance, bad faith, or gross negligence in the
performance of his duties, or by reason of his reckless disregard of
the duties involved in the conduct of his office or under his
agreement with Registrant. Registrant will comply with Rule 484 under
the Securities Act of 1933 and Release 11330 under the Investment
Company Act of 1940 in connection with any indemnification.
Insofar as indemnification for liability arising under the Securities
Act of 1933 may be permitted to trustees, officers, and controlling
persons or Registrant pursuant to the foregoing provisions, or
otherwise, Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Investment Company Act of 1940, as
amended, and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment
by Registrant of expenses incurred or paid by a trustee, officer, or
controlling person of Registrant in the successful defense of any
action, suit, or proceeding) is asserted by such trustee, officer, or
controlling person in connection with the securities being registered,
Registrant will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question of whether such indemnification
by it is against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.
Item 28. Business and Other Connections of the Investment Adviser
Key Asset Management Inc. ("KAM") is the investment adviser to each
fund of the Victory Portfolios. KAM is a wholly-owned indirect
subsidiary of KeyCorp, a bank holding company which had total assets
of approximately $76 billion as of June 30, 1998. KeyCorp is a leading
financial institution doing business in 13 states from Maine to
Alaska, providing a full array of trust, commercial, and retail
banking services. Its non-bank subsidiaries include investment
advisory, securities brokerage, insurance, bank credit card
processing, mortgage and leasing companies. KAM and its affiliates
have over $64 billion in assets under management, and provides a full
range of investment management services to personal and corporate
clients.
Lakefront Capital Investors, Inc. ("Lakefront"), sub-adviser of the
Lakefront Fund, 127 Public Square, 15th Floor, Cleveland, Ohio 44114,
was incorporated in 1991.
C-8
<PAGE>
THE VICTORY PORTFOLIOS
As of June 1, 1998, Indocam International Investment Services, S.A.
("IIIS"), is a sub-adviser to the International Growth Fund. IIIS and
its advisory affiliates ("Indocam") are the global asset management
component of the Credit Agricole banking and financial services group.
IIIS specializes in global asset management and offers its clients a
full range of asset management services from offices located in Paris,
Hong Kong, Singapore, and Tokyo. As of December 31, 1997, Indocam
managed approximately $124 billion for its clients. IIIS is a
registered investment adviser with the SEC and also serves as the
investment adviser to the France Growth Fund and as subadviser for the
BNY Hamilton International Equity Fund and the John Hancock European
Equity Fund. Indocam has affiliates which are engaged in the brokerage
business. The principal office of IIIS is 9, rue Louis Murat, Paris,
France 75008.
To the knowledge of Registrant, none of the directors or officers of
KAM, Lakefront, or IIIS, except those set forth below, is or has been
at any time during the past two calendar years engaged in any other
business, profession, vocation or employment of a substantial nature,
except that certain directors and officers of KAM also hold positions
with KeyCorp or its subsidiaries.
The principal executive officers and directors of KAM are as follows:
Directors:
William G. Spears, Senior Managing Director, Chairman and Chief
Executive Officer.
Richard J. Buoncore, Senior Managing Director, President and Chief
Operating Officer.
Anthony Aveni, Senior Managing Director. Also Chief Investment Officer
of KAM.
Vincent DeP. Farrell, Senior Managing Director and Chief Investment
Officer. Also Chief Investment Officer, Executive Vice President and
Managing Director of Spears, Benzak, Salomon & Farrell Division
("SBSF").
Richard E. Salomon, Senior Managing Director. Also President and
Director of Wealth Management, SBSF.
Gary R. Martzolf, Senior Managing Director.
Other Officers:
Charles G. Crane, Senior Managing Director and Chief Market
Strategist.
James D. Kacic, Chief Financial Officer, Chief Administrative Officer,
and Senior Managing Director.
C-9
<PAGE>
THE VICTORY PORTFOLIOS
William R. Allen, Managing Director.
Michael Foisel, Assistant Treasurer.
Michael Stearns, Chief Compliance Officer.
William J. Blake, Secretary.
Steven N. Bulloch, Assistant Secretary. Also, Senior Vice President
and Senior Counsel of KeyCorp Management Company.
Kathleen A. Dennis, Senior Managing Director.
The business address of each of the foregoing individuals is 127 Public
Square, Cleveland, Ohio 44114.
The principal executive officers and directors of Lakefront are as
follows:
Nathaniel E. Carter, President and Chief Investment Officer of
Lakefront.
Kenneth A. Louard, Chief Operating Officer.
The business address of each of the foregoing individuals is 127 Public
Square, Cleveland, Ohio 44114.
The principal executive officers and directors of IIIS are as follows:
Jean-Claude Kaltenbach, Chairman and CEO.
Ian Gerald McEvatt, Director.
Claude Doumic, Director.
Didier Guyot de la Pommeraye, Director.
Charles Vergnot, Director.
Eric Jostrom, Director.
Gerard Sutterlin, Secretary General.
The business address of each of the foregoing individuals is 9, rue
Louis Murat, Paris, France 75008.
C-10
<PAGE>
THE VICTORY PORTFOLIOS
Item 29. Principal Underwriter
(a) BISYS Fund Services, the Registrant's administrator, also acts as the
distributor for the following investment companies as of July 24,
1998.
Alpine Equity Trust
American Performance Funds
AmSouth Mutual Funds
The ARCH Fund, Inc.
The BB&T Mutual Funds Group
The Coventry Group
The Eureka Funds
Fountain Square Funds
Hirtle Callaghan Trust
HSBC Family of Funds
INTRUST Funds Trust
The Infinity Mutual Funds, Inc.
The Kent Funds
Magna Funds
Meyers Investment Trust
MMA Praxis Mutual Funds
M.S.D. & T. Funds
Pacific Capital Funds
Parkstone Group of Funds
The Parkstone Advantage Fund
Pegasus Funds
The Republic Advisor Funds Trust
Puget Sound Asset Management
The Republic Funds Trust
The Riverfront Funds, Inc.
Sefton Funds
SBSF Funds, Inc. dba Key Mutual Funds
The Sessions Group
Summit Investment Trust
Variable Insurance Funds
The Victory Variable Funds
Vintage Mutual Funds, Inc.
(b) Directors, officers and partners of BISYS Fund Services, Inc., the
General Partner of BISYS Fund Services, as of June 15, 1998 were as
follows:
Lynn J. Mangum, Chairman and CEO.
Dennis Sheehan, Director, Executive Vice President and Treasurer.
J. David Huber, President.
Kevin J. Dell, Vice President and Secretary.
C-11
<PAGE>
THE VICTORY PORTFOLIOS
Mark Rybarczyk, Senior Vice President.
William Tomko, Senior Vice President.
Michael D. Burns, Vice President.
David Blackmore, Vice President.
Steve Ludwig, Compliance Officer.
Robert Tuch, Assistant Secretary.
The business address of each of the foregoing individuals is BISYS Fund
Services, Inc., 3435 Stelzer Road, Columbus, Ohio 43215.
Item 30. Location of Accounts and Records
(1) Key Asset Management Inc., 127 Public Square, Cleveland, Ohio
44114-1306 (records relating to its functions as investment adviser
and sub-administrator).
(2) Lakefront Capital Investors, Inc., 127 Public Square, Cleveland, Ohio
44114-1306 (records relating to its functions as investment
sub-adviser for the Lakefront Fund only).
(3) Indocam International Investment Services, S.A., 9, rue Louis Murat,
Paris, France 75008 (records relating to its functions as investment
sub-adviser for the International Growth Fund only).
(4) KeyBank National Association, 127 Public Square, Cleveland, Ohio
44114-1306 (records relating to its functions as shareholder servicing
agent).
(5) BISYS Fund Services, 3435 Stelzer Road, Columbus, Ohio 43219 (records
relating to its functions as administrator, distributor and fund
accountant).
(6) State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02110-3875 (records relating to its functions as
transfer agent).
(7) Boston Financial Data Services, Inc. Two Heritage Drive, Quincy,
Massachusetts 02171 (records relating to its functions as dividend
disbursing agent and shareholder servicing agent).
(8) Key Trust Company of Ohio, N.A., 127 Public Square, Cleveland, Ohio
44114- 1306 (records relating to its functions as custodian and
securities lending agent).
(9) Morgan Stanley Trust Company, 1585 Broadway, New York, New York 10036
(records relating to its functions as sub-custodian of the Balanced
Fund, Convertible Securities Fund, International Growth Fund,
Lakefront Fund, and Real Estate Investment Fund).
C-12
<PAGE>
THE VICTORY PORTFOLIOS
Item 31. Management Services
None.
Item 32. Undertakings
(a) Registrant undertakes to call a meeting of shareholders, at the
request of holders of 10% of the Registrant's outstanding shares, for
the purpose of voting upon the question of removal of a trustee or
trustees and undertakes to assist in communications with other
shareholders as required by Section 16(c) of the Investment Company
Act of 1940.
(b) None.
(c) Registrant undertakes to furnish to each person to whom a prospectus
is delivered a copy of the Registrant's latest Annual Report to
Shareholders upon request and without charge.
NOTICE
A copy of the Delaware Trust Instrument of The Victory Portfolios is on file
with the Secretary of State of Delaware and notice is hereby given that this
Post-Effective Amendment to the Registrant's Registration Statement has been
executed on behalf of the Registrant by officers of, and Trustees of, the
Registrant as officers and as Trustees, respectively, and not individually, and
that the obligations of or arising out of this instrument are not binding upon
any of the Trustees, officers or shareholders of The Victory Portfolios
individually but are binding only upon the assets and property of the
Registrant.
C-13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant has duly caused this Post-Effective
Amendment to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York and State of New
York, on the 29th day of July, 1998.
THE VICTORY PORTFOLIOS
By: /s/Leigh A. Wilson
---------------------------------------
Leigh A. Wilson, President and Trustee
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities
indicated on the 29th day of July, 1998.
/s/ Roger Noall Chairman of the Board and Trustee
- ---------------
Roger Noall
/s/ Leigh A. Wilson President and Trustee
- -------------------
Leigh A. Wilson
/s/Gary Tenkman Treasurer
- ---------------
Gary Tenkman
* Trustee
- ------------------
Edward P. Campbell
* Trustee
- -------------
Harry Gazelle
* Trustee
- -------------------
Thomas F. Morrissey
* Trustee
- ------------------
H. Patrick Swygert
* Trustee
- -------------
Frank A. Weil
* Trustee
- ------------------
Eugene J. McDonald
*By: /s/ Carl Frischling
--------------------
Carl Frischling
Attorney-in-Fact
Attorney-in-Fact pursuant to powers of attorney filed with Post-Effective
Amendment No. 36 to Registrant's Registration Statement on Form N-1A on
February 26, 1998 and with Pre-Effective Amendment No. 2 to Registrant's
Registration Statement on Form N-14 on February 3, 1998.
C-14
<PAGE>
THE VICTORY PORTFOLIOS
INDEX TO EXHIBITS
Exhibit Number
EX-99.B5(a) Investment Advisory Agreement dated as of March 1, 1997,
between the Registrant and Key Asset Management Inc., as
amended March 2, 1998 and May 29, 1998
EX-99.B5(d) Investment Advisory Agreement dated as of June 1, 1998,
between the Registrant andKey Asset Management Inc. regarding
the International Growth Fund
EX-99.B6(a) Distribution Agreement dated June 1, 1996 between the
Registrant and BISYS Fund Services Limited Partnership, as
amended March 2, 1998 and May 29, 1998
EX-99.B8(a) Amended and Restated Mutual Fund Custody Agreement dated
August 1, 1996, as amended March 2, 1998 and May 29, 1998
EX-99.B9(a) Administration Agreement dated October 1, 1997 between the
Registrant and BISYS Fund Services Limited Partnership, as
amended March 2, 1998 and May 29, 1998
EX-99.B9(b) Sub-Administration Agreement dated October 1, 1997 between
BISYS Fund Services Limited Partnership d/b/a BISYS Fund
Services and Key Asset Management Inc., as amended March 2,
1998 and May 29, 1998
EX-99.B9(c) Transfer Agency and Service Agreement dated July 12, 1996
between the Registrant and State Street Bank and Trust
Company, as amended August 1, 1996 and March 2, 1998 and May
29, 1998
EX-99.B9(d) Fund Accounting Agreement dated May 31, 1995 between the
Registrant and BISYS Fund Services Ohio, Inc., as amended
February 19, 1997 and March 2, 1998 and May 29, 1998
EX-99.B9(e) Shareholder Servicing Plan dated June 5, 1995, as amended
March 2, 1998 and May 29, 1998
EX-99.B11(a) Consent of Kramer, Levin, Naftalis & Frankel
EX-99.B11(b) Consent of PricewaterhouseCoopers LLP
EX-99.B15(a) Distribution and Service Plan dated June 5, 1995 for the
Class A Shares of the Registrant, as amended February 19,
1997, March 2, 1998 and May 29, 1998
INVESTMENT ADVISORY AGREEMENT
BETWEEN
THE VICTORY PORTFOLIOS
AND
KEY ASSET MANAGEMENT INC.
AGREEMENT made as of the 1st day of March, 1997, by and between The
Victory Portfolios, a Delaware business trust which may issue one or more series
of shares of beneficial interest (the "Company"), and Key Asset Management Inc.,
a New York corporation (the "Adviser").
WHEREAS, the Company is registered as an open-end, management
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"); and
WHEREAS, the Company desires to retain the Adviser to furnish
investment advisory services to the funds listed on Schedule A (each, a "Fund"
and collectively, the "Funds"), and the Adviser represents that it is willing
and possesses legal authority to so furnish such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. APPOINTMENT.
(a) General. The Company hereby appoints the Adviser to act as
investment adviser to the Funds for the period and on the
terms set forth in this Agreement. The Adviser accepts such
appointment and agrees to furnish the services herein set
forth for the compensation herein provided.
(b) Employees of Affiliates. The Adviser may, in its discretion,
provide such services through its own employees or the
employees of one or more affiliated companies that are
qualified to act as an investment adviser to the Company under
applicable laws and are under the control of KeyCorp, the
indirect parent of the Adviser; provided that (i) all persons,
when providing services hereunder, are functioning as part of
an organized group of persons, and (ii) such organized group
of persons is managed at all times by authorized officers of
the Adviser.
(c) Sub-Advisers. It is understood and agreed that the Adviser may
from time to time employ or associate with such other entities
or persons as the Adviser believes appropriate to assist in
the performance of this Agreement with respect to a particular
Fund or Funds (each a "Sub-Adviser"), and that any such
Sub-Adviser shall have all of the rights and powers of the
Adviser set forth in this Agreement; provided that a Fund
shall not pay any additional compensation for any Sub- Adviser
and the Adviser shall be as fully responsible to the Company
for the acts and omissions of the Sub-Adviser as it is for its
own acts and omissions; and provided further that the
retention of any Sub-Adviser shall be approved in
<PAGE>
advance by (i) the Board of Trustees of the Company and (ii)
the shareholders of the relevant Fund if required under any
applicable provisions of the 1940 Act. The Adviser will
review, monitor and report to the Company's Board of Trustees
regarding the performance and investment procedures of any
Sub-Adviser. In the event that the services of any Sub-Adviser
are terminated, the Adviser may provide investment advisory
services pursuant to this Agreement to the Fund without a
Sub-Adviser and without further shareholder approval, to the
extent consistent with the 1940 Act. A Sub-Adviser may be an
affiliate of the Adviser.
2. DELIVERY OF DOCUMENTS. The Company has delivered to the Adviser
copies of each of the following documents along with all amendments thereto
through the date hereof, and will promptly deliver to it all future amendments
and supplements thereto, if any:
(a) the Company's Trust Instrument;
(b) the By-Laws of the Company;
(c) resolutions of the Board of Trustees of the Company
authorizing the execution and delivery of this Agreement;
(d) the most recent Post-Effective Amendment to the Company's
Registration Statement under the Securities Act of 1933, as
amended (the "1933 Act"), and the 1940 Act, on Form N-1A as
filed with the Securities and Exchange Commission (the
"Commission");
(e) Notification of Registration of the Company under the 1940 Act
on Form N-8A as filed with the Commission; and
(f) the currently effective Prospectuses and Statements of
Additional Information of the Funds.
3. INVESTMENT ADVISORY SERVICES.
(a) Management of the Funds. The Adviser hereby undertakes to act
as investment adviser to the Funds. The Adviser shall
regularly provide investment advice to the Funds and
continuously supervise the investment and reinvestment of
cash, securities and other property composing the assets of
the Funds and, in furtherance thereof, shall:
(i) supervise all aspects of the operations of the
Company and each Fund;
(ii) obtain and evaluate pertinent economic, statistical
and financial data, as well as other significant
events and developments, which affect the economy
generally, the Funds' investment programs, and the
issuers of securities included in the Funds'
portfolios and the industries in which
<PAGE>
they engage, or which may relate to securities or
other investments which the Adviser may deem
desirable for inclusion in a Fund's portfolio;
(iii) determine which issuers and securities shall be
included in the portfolio of each Fund;
(iv) furnish a continuous investment program for each
Fund;
(v) in its discretion and without prior consultation with
the Company, buy, sell, lend and otherwise trade any
stocks, bonds and other securities and investment
instruments on behalf of each Fund; and
(vi) take, on behalf of each Fund, all actions the Adviser
may deem necessary in order to carry into effect such
investment program and the Adviser's functions as
provided above, including the making of appropriate
periodic reports to the Company's Board of Trustees.
(b) Covenants. The Adviser shall carry out its investment advisory
and supervisory responsibilities in a manner consistent with
the investment objectives, policies, and restrictions provided
in: (i) each Fund's Prospectus and Statement of Additional
Information as revised and in effect from time to time; (ii)
the Company's Trust Instrument, By-Laws or other governing
instruments, as amended from time to time; (iii) the 1940 Act;
(iv) other applicable laws; and (v) such other investment
policies, procedures and/or limitations as may be adopted by
the Company with respect to a Fund and provided to the Adviser
in writing. The Adviser agrees to use reasonable efforts to
manage each Fund so that it will qualify, and continue to
qualify, as a regulated investment company under Subchapter M
of the Internal Revenue Code of 1986, as amended, and
regulations issued thereunder (the "Code"), except as may be
authorized to the contrary by the Company's Board of Trustees.
The management of the Funds by the Adviser shall at all times
be subject to the review of the Company's Board of Trustees.
(c) Books and Records. Pursuant to applicable law, the Adviser
shall keep each Fund's books and records required to be
maintained by, or on behalf of, the Funds with respect to
advisory services rendered hereunder. The Adviser agrees that
all records which it maintains for a Fund are the property of
the Fund and it will promptly surrender any of such records to
the Fund upon the Fund's request. The Adviser further agrees
to preserve for the periods prescribed by Rule 31a-2 under the
1940 Act any such records of the Fund required to be preserved
by such Rule.
(d) Reports, Evaluations and other Services. The Adviser shall
furnish reports, evaluations, information or analyses to the
Company with respect to the Funds and in connection with the
Adviser's services hereunder as the Company's Board of
Trustees may request from time to time or as the Adviser may
otherwise deem to be desirable. The Adviser shall make
recommendations to the Company's
<PAGE>
Board of Trustees with respect to Company policies, and shall
carry out such policies as are adopted by the Board of
Trustees. The Adviser shall, subject to review by the Board of
Trustees, furnish such other services as the Adviser shall
from time to time determine to be necessary or useful to
perform its obligations under this Agreement.
(e) Purchase and Sale of Securities. The Adviser shall place all
orders for the purchase and sale of portfolio securities for
each Fund with brokers or dealers selected by the Adviser,
which may include brokers or dealers affiliated with the
Adviser to the extent permitted by the 1940 Act and the
Company's policies and procedures applicable to the Funds. The
Adviser shall use its best efforts to seek to execute
portfolio transactions at prices which, under the
circumstances, result in total costs or proceeds being the
most favorable to the Funds. In assessing the best overall
terms available for any transaction, the Adviser shall
consider all factors it deems relevant, including the breadth
of the market in the security, the price of the security, the
financial condition and execution capability of the broker or
dealer, research services provided to the Adviser, and the
reasonableness of the commission, if any, both for the
specific transaction and on a continuing basis. In no event
shall the Adviser be under any duty to obtain the lowest
commission or the best net price for any Fund on any
particular transaction, nor shall the Adviser be under any
duty to execute any order in a fashion either preferential to
any Fund relative to other accounts managed by the Adviser or
otherwise materially adverse to such other accounts.
(f) Selection of Brokers or Dealers. In selecting brokers or
dealers qualified to execute a particular transaction, brokers
or dealers may be selected who also provide brokerage and
research services (as those terms are defined in Section 28(e)
of the Securities Exchange Act of 1934) to the Adviser, the
Funds and/or the other accounts over which the Adviser
exercises investment discretion. The Adviser is authorized to
pay a broker or dealer who provides such brokerage and
research services a commission for executing a portfolio
transaction for a Fund which is in excess of the amount of
commission another broker or dealer would have charged for
effecting that transaction if the Adviser determines in good
faith that the total commission is reasonable in relation to
the value of the brokerage and research services provided by
such broker or dealer, viewed in terms of either that
particular transaction or the overall responsibilities of the
Adviser with respect to accounts over which it exercises
investment discretion. The Adviser shall report to the Board
of Trustees of the Company regarding overall commissions paid
by the Funds and their reasonableness in relation to the
benefits to the Funds.
(g) Aggregation of Securities Transactions. In executing portfolio
transactions for a Fund, the Adviser may, to the extent
permitted by applicable laws and regulations, but shall not be
obligated to, aggregate the securities to be sold or purchased
with those of other Funds or its other clients if, in the
Adviser's reasonable judgment, such aggregation (i) will
result in an overall economic
<PAGE>
benefit to the Fund, taking into consideration the
advantageous selling or purchase price, brokerage commission
and other expenses, and trading requirements, and (ii) is not
inconsistent with the policies set forth in the Company's
registration statement and the Fund's Prospectus and Statement
of Additional Information. In such event, the Adviser will
allocate the securities so purchased or sold, and the expenses
incurred in the transaction, in an equitable manner,
consistent with its fiduciary obligations to the Fund and such
other clients.
4. REPRESENTATIONS AND WARRANTIES.
(a) The Adviser hereby represents and warrants to the Company as
follows:
(i) The Adviser is a corporation duly organized and in
good standing under the laws of the State of New York
and is fully authorized to enter into this Agreement
and carry out its duties and obligations hereunder.
(ii) The Adviser is registered as an investment adviser
with the Commission under the Investment Advisers Act
of 1940, as amended (the "Advisers Act"), and is
registered or licensed as an investment adviser under
the laws of all applicable jurisdictions. The Adviser
shall maintain such registrations or licenses in
effect at all times during the term of this
Agreement.
(iii) The Adviser at all times shall provide its best
judgment and effort to the Company in carrying out
the Adviser's obligations hereunder.
(b) The Company hereby represents and warrants to the Adviser as
follows:
(i) The Company has been duly organized as a business
trust under the laws of the State of Delaware and is
authorized to enter into this Agreement and carry out
its terms.
(ii) The Company is registered as an investment company
with the Commission under the 1940 Act and shares of
each Fund are registered for offer and sale to the
public under the 1933 Act and all applicable state
securities laws where currently sold. Such
registrations will be kept in effect during the term
of this Agreement.
5. COMPENSATION. As compensation for the services which the Adviser is
to provide or cause to be provided pursuant to Paragraph 3, each Fund shall pay
to the Adviser out of Fund assets an annual fee, computed and accrued daily and
paid in arrears on the first business day of every month, at the rate set forth
opposite each Fund's name on Schedule A, which shall be a percentage of the
average daily net assets of the Fund (computed in the manner set forth in the
<PAGE>
Fund's most recent Prospectus and Statement of Additional Information)
determined as of the close of business on each business day throughout the
month. At the request of the Adviser, some or all of such fee shall be paid
directly to a Sub-Adviser. The fee for any partial month under this Agreement
shall be calculated on a proportionate basis. In the event that the total
expenses of a Fund exceed the limits on investment company expenses imposed by
any statute or any regulatory authority of any jurisdiction in which shares of
such Fund are qualified for offer and sale, the Adviser will bear the amount of
such excess, except: (i) the Adviser shall not be required to bear such excess
to an extent greater than the compensation due to the Adviser for the period for
which such expense limitation is required to be calculated unless such statute
or regulatory authority shall so require, and (ii) the Adviser shall not be
required to bear the expenses of the Fund to an extent which would result in the
Fund's or Company's inability to qualify as a regulated investment company under
the provisions of Subchapter M of the Code.
6. INTERESTED PERSONS. It is understood that, to the extent consistent
with applicable laws, the Trustees, officers and shareholders of the Company are
or may be or become interested in the Adviser as directors, officers or
otherwise and that directors, officers and shareholders of the Adviser are or
may be or become similarly interested in the Company.
7. EXPENSES. As between the Adviser and the Funds, the Funds will pay
for all their expenses other than those expressly stated to be payable by the
Adviser hereunder, which expenses payable by the Funds shall include, without
limitation, (i) interest and taxes; (ii) brokerage commissions and other costs
in connection with the purchase or sale of securities and other investment
instruments, which the parties acknowledge might be higher than other brokers
would charge when a Fund utilizes a broker which provides brokerage and research
services to the Adviser as contemplated under Paragraph 3 above; (iii) fees and
expenses of the Company's Trustees that are not employees of the Adviser; (iv)
legal and audit expenses; (v) administrator, custodian, pricing and bookkeeping,
registrar and transfer agent fees and expenses; (vi) fees and expenses related
to the registration and qualification of the Funds' shares for distribution
under state and federal securities laws; (vii) expenses of printing and mailing
reports and notices and proxy material to shareholders, unless otherwise
required; (viii) all other expenses incidental to holding meetings of
shareholders, including proxy solicitations therefor, unless otherwise required;
(ix) expenses of typesetting for printing Prospectuses and Statements of
Additional Information and supplements thereto; (x) expenses of printing and
mailing Prospectuses and Statements of Additional Information and supplements
thereto sent to existing shareholders; (xi) insurance premiums for fidelity
bonds and other coverage to the extent approved by the Company's Board of
Trustees; (xii) association membership dues authorized by the Company's Board of
Trustees; and (xiii) such non-recurring or extraordinary expenses as may arise,
including those relating to actions, suits or proceedings to which the Company
is a party (or to which the Funds' assets are subject) and any legal obligation
for which the Company may have to provide indemnification to the Company's
Trustees and officers.
8. NON-EXCLUSIVE SERVICES; LIMITATION OF ADVISER'S LIABILITY. The
services of the Adviser to the Funds are not to be deemed exclusive and the
Adviser may render similar services to others and engage in other activities.
The Adviser and its affiliates may enter into
<PAGE>
other agreements with the Funds and the Company for providing additional
services to the Funds and the Company which are not covered by this Agreement,
and to receive additional compensation for such services. In the absence of
willful misfeasance, bad faith, gross negligence or reckless disregard of
obligations or duties hereunder on the part of the Adviser, or a breach of
fiduciary duty with respect to receipt of compensation, neither the Adviser nor
any of its directors, officers, shareholders, agents, or employees shall be
liable or responsible to the Company, the Funds or to any shareholder of the
Funds for any error of judgment or mistake of law or for any act or omission in
the course of, or connected with, rendering services hereunder or for any loss
suffered by the Company, a Fund or any shareholder of a Fund in connection with
the performance of this Agreement.
9. EFFECTIVE DATE; MODIFICATIONS; TERMINATION. This Agreement shall
become effective on March 1, 1997, provided that it shall have been approved by
a majority of the outstanding voting securities of each Fund, in accordance with
the requirements of the 1940 Act, or such later date as may be agreed by the
parties following such shareholder approval.
(a) This Agreement shall continue in force until December 31,
1997. Thereafter, this Agreement shall continue in effect as
to each Fund for successive annual periods, provided such
continuance is specifically approved at least annually (i) by
a vote of the majority of the Trustees of the Company who are
not parties to this Agreement or interested persons of any
such party, cast in person at a meeting called for the purpose
of voting on such approval and (ii) by a vote of the Board of
Trustees of the Company or a majority of the outstanding
voting shares of the Fund.
(b) The modification of any of the non-material terms of this
Agreement may be approved by a vote of a majority of those
Trustees of the Company who are not interested persons of any
party to this Agreement, cast in person at a meeting called
for the purpose of voting on such approval.
(c) Notwithstanding the foregoing provisions of this Paragraph 9,
either party hereto may terminate this Agreement at any time
on sixty (60) days' prior written notice to the other, without
payment of any penalty. Such a termination by the Company may
be effected severally as to any particular Fund, and shall be
effected as to any Fund by vote of the Company's Board of
Trustees or by vote of a majority of the outstanding voting
securities of the Fund. This Agreement shall terminate
automatically in the event of its assignment.
10. LIMITATION OF LIABILITY OF TRUSTEES AND SHAREHOLDERS. The Adviser
acknowledges the following limitation of liability:
The terms "The Victory Portfolios" and "Trustees" refer, respectively,
to the trust created and the Trustees, as trustees but not individually or
personally, acting from time to time under the Trust Instrument, to which
reference is hereby made and a copy of which is on file
<PAGE>
at the office of the Secretary of State of the State of Delaware, such reference
being inclusive of any and all amendments thereto so filed or hereafter filed.
The obligations of "The Victory Portfolios" entered into in the name or on
behalf thereof by any of the Trustees, representatives or agents are made not
individually, but in such capacities and are not binding upon any of the
Trustees, shareholders or representatives of the Company personally, but bind
only the assets of the Company, and all persons dealing with the Company or a
Fund must look solely to the assets of the Company or Fund for the enforcement
of any claims against the Company or Fund.
11. SERVICE MARK. The service mark of the Company and the name
"Victory" (and derivatives thereof) have been licensed to the Company by
KeyCorp, through its subsidiary Key Trust Company ("Key Trust"), an affiliate of
the Adviser, pursuant to a License Agreement dated June 21, 1993, and their
continued use is subject to the right of Key Trust to withdraw this permission
under the License Agreement in the event the Adviser or another subsidiary of
KeyCorp is not the investment adviser to the Company.
12. CERTAIN DEFINITIONS. The terms "vote of a majority of the
outstanding voting securities," "assignment," "control," and "interested
persons," when used herein, shall have the respective meanings specified in the
1940 Act. References in this Agreement to the 1940 Act and the Advisers Act
shall be construed as references to such laws as now in effect or as hereafter
amended, and shall be understood as inclusive of any applicable rules,
interpretations and/or orders adopted or issued thereunder by the Commission.
13. INDEPENDENT CONTRACTOR. The Adviser shall for all purposes herein
be deemed to be an independent contractor and shall, unless otherwise expressly
provided herein or authorized by the Board of Trustees of the Company from time
to time, have no authority to act for or represent a Fund in any way or
otherwise be deemed an agent of a Fund.
14. STRUCTURE OF AGREEMENT. The Company is entering into this Agreement
on behalf of the respective Funds severally and not jointly. The
responsibilities and benefits set forth in this Agreement shall refer to each
Fund severally and not jointly. No Fund shall have any responsibility for any
obligation of any other Fund arising out of this Agreement. Without otherwise
limiting the generality of the foregoing:
(a) any breach of any term of this Agreement regarding the Company
with respect to any one Fund shall not create a right or
obligation with respect to any other Fund;
(b) under no circumstances shall the Adviser have the right to set
off claims relating to a Fund by applying property of any
other Fund; and
(c) the business and contractual relationships created by this
Agreement, consideration for entering into this Agreement, and
the consequences of such relationship and consideration relate
solely to the Company and the particular Fund to which such
relationship and consideration applies.
<PAGE>
This Agreement is intended to govern only the relationships between the
Adviser, on the one hand, and the Company and the Funds, on the other hand, and
(except as specifically provided above in this Paragraph 14) is not intended to
and shall not govern (i) the relationship between the Company and any Fund or
(ii) the relationships among the respective Funds.
15. GOVERNING LAW. This Agreement shall be governed by the laws of the
State of Ohio, provided that nothing herein shall be construed in a manner
inconsistent with the 1940 Act or the Advisers Act.
16. SEVERABILITY. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby and, to this extent, the provisions
of this Agreement shall be deemed to be severable.
17. NOTICES. Notices of any kind to be given to the Company hereunder
by the Adviser shall be in writing and shall be duly given if mailed or
delivered to 3435 Stelzer Road, Columbus, Ohio 43219-3035, Attention: George O.
Martinez, Esq.; with a copy to Kramer, Levin, Naftalis & Frankel, 919 Third
Avenue, New York, New York, 10022, Attention: Carl Frischling, Esq., or at such
other address or to such individual as shall be so specified by the Company to
the Adviser. Notices of any kind to be given to the Adviser hereunder by the
Company shall be in writing and shall be duly given if mailed or delivered to
the Adviser at 127 Public Square, Cleveland, Ohio 44114-1306, Attention: William
G. Spears with a copy to William J. Blake, Esq., or at such other address or to
such individual as shall be so specified by the Adviser to the Company. Notices
shall be effective upon delivery.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the date
written above.
THE VICTORY PORTFOLIOS KEY ASSET MANAGEMENT INC.
By: /s/Scott A. Englehart By: /s/Kathleen A. Dennis
------------------------ -------------------------------
Name: Scott A. Englehart Name: Kathleen A. Dennis
Title: Secretary Title: Senior Managing Director
<PAGE>
Schedule A
Name of Fund Fee*
1. The Victory Balanced Fund 1.00%
2. The Victory Diversified Stock Fund .65%
3. The Victory Government Mortgage Fund .50%
4. The Victory Growth Fund 1.00%
5. The Victory Intermediate Income Fund .75%
6. The Victory International Growth Fund 1.10%
7. The Victory Investment Quality Bond Fund .75%
8. The Victory Limited Term Income Fund .50%
9. The Victory Ohio Municipal Bond Fund .60%
10. The Victory Ohio Regional Stock Fund .75%
11. The Victory Prime Obligations Fund .35%
12. The Victory Special Value Fund 1.00%
13. The Victory Stock Index Fund .60%
14. The Victory Tax-Free Money Market Fund .35%
15. The Victory U.S. Government Obligations Fund .35%
16. The Victory Value Fund 1.00%
17. The Victory Financial Reserves Fund .50%
18. The Victory Fund for Income .50%
19. The Victory Government Bond Fund .55%
20. The Victory Institutional Money Market Fund .25%
21. The Victory National Municipal Bond Fund .55%
22. The Victory New York Tax-Free Fund .55%
23. The Victory Ohio Municipal Money Market Fund .50%
24. The Victory Special Growth Fund 1.00%
- --------------------
* As a percentage of average daily net assets. Note, however, that the
Adviser shall have the right, but not the obligation, to voluntarily
waive any portion of the advisory fee from time to time. Any such
voluntary waiver will be irrevocable and determined in advance of
rendering investment advisory services by the Adviser, and shall be in
writing and signed by the parties hereto.
<PAGE>
SCHEDULE A
Amended as of March 2, 1998
Name of Fund Fee*
- ------------ ----
1. Victory Balanced Fund 1.00%
2. Victory Diversified Stock Fund .65%
3. Victory Government Mortgage Fund .50%
4. Victory Growth Fund 1.00%
5. Victory Financial Reserves Fund .50%
6. Victory Fund for Income .50%
7. Victory Institutional Money Market Fund .25%
8. Victory Intermediate Income Fund .75%
9. Victory International Growth Fund 1.10%
10. Victory Investment Quality Bond Fund .75%
11. Victory Limited Term Income Fund .50%
12. Victory National Municipal Bond Fund .55%
13. Victory New York Tax-Free Fund .55%
14. Victory Ohio Municipal Bond Fund .60%
15. Victory Ohio Municipal Money Market Fund .50%
16. Victory Ohio Regional Stock Fund .75%
17. Victory Prime Obligations Fund .35%
18. Victory Special Growth Fund 1.00%
19. Victory Special Value Fund 1.00%
20. Victory Stock Index Fund .60%
21. Victory Tax-Free Money Market Fund .35%
22. Victory U.S. Government Obligations Fund .35%
23. Victory Value Fund 1.00%
24. Victory Federal Money Market Fund .25%
25. Victory Convertible Securities Fund .75%
26. Victory LifeChoice Conservative Investor Fund .20%
27. Victory LifeChoice Growth Investor Fund .20%
28. Victory LifeChoice Moderate Investor Fund .20%
- --------------------
* As a percentage of average daily net assets. Note, however, that the
Adviser shall have the right, but not the obligation, to voluntarily
waive any portion of the advisory fee from time to time. Any such
voluntary waiver will be irrevocable and determined in advance of
rendering investment advisory services by the Adviser, and shall be in
writing and signed by the parties hereto.
<PAGE>
SCHEDULE A
Amended as of May 29, 1998
Name of Fund Fee*
------------ ----
1. Victory Balanced Fund 1.00%
2. Victory Diversified Stock Fund .65%
3. Victory Government Mortgage Fund .50%
4. Victory Growth Fund 1.00%
5. Victory Financial Reserves Fund .50%
6. Victory Fund for Income .50%
7. Victory Institutional Money Market Fund .25%
8. Victory Intermediate Income Fund .75%
9. Victory International Growth Fund 1.10%
10. Victory Investment Quality Bond Fund .75%
11. Victory Limited Term Income Fund .50%
12. Victory National Municipal Bond Fund .55%
13. Victory New York Tax-Free Fund .55%
14. Victory Ohio Municipal Bond Fund .60%
15. Victory Ohio Municipal Money Market Fund .50%
16. Victory Ohio Regional Stock Fund .75%
17. Victory Prime Obligations Fund .35%
18. Victory Special Growth Fund 1.00%
19. Victory Special Value Fund 1.00%
20. Victory Stock Index Fund .60%
21. Victory Tax-Free Money Market Fund .35%
22. Victory U.S. Government Obligations Fund .35%
23. Victory Value Fund 1.00%
24. Victory Federal Money Market Fund .25%
25. Victory Convertible Securities Fund .75%
26. Victory LifeChoice Conservative Investor Fund .20%
27. Victory LifeChoice Growth Investor Fund .20%
28. Victory LifeChoice Moderate Investor Fund .20%
29.Victory Maine Municipal Bond Fund (Intermediate) .55%
30.Victory Maine Municipal Bond Fund .55%
(Short-Intermediate)
31.Victory Michigan Municipal Bond Fund .60%
32.Victory Equity Income Fund .75%
33.Victory National Municipal Bond Fund (Long) .60%
34.Victory National Municipal Bond Fund .55%
(Short-Intermediate)
- ----------------
* As a percentage of average daily net assets. Note, however, that the
Adviser shall have the right, but not the obligation, to voluntarily
waive any portion of the advisory fee from time to time. Any such
voluntary waiver will be irrevocable and determined in advance of
rendering investment advisory services by the Adviser, and shall be in
writing and signed by the parties hereto.
INVESTMENT ADVISORY AGREEMENT
BETWEEN
THE VICTORY PORTFOLIOS
AND
KEY ASSET MANAGEMENT INC.
AGREEMENT made as of the 1st day of June, 1998, by and between The
Victory Portfolios, a Delaware business trust which may issue one or more series
of shares of beneficial interest (the "Company"), and Key Asset Management Inc.,
a New York corporation (the "Adviser").
WHEREAS, the Company is registered as an open-end, management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
and
WHEREAS, the Company desires to retain the Adviser to furnish investment
advisory services to the funds listed on Schedule A (each, a "Fund" and
collectively, the "Funds"), and the Adviser represents that it is willing and
possesses legal authority to so furnish such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. DELIVERY OF DOCUMENTS. The Company has delivered to the Adviser
copies of each of the following documents along with all amendments thereto
through the date hereof, and will promptly deliver to it all future amendments
and supplements thereto, if any:
(a) the Company's Trust Instrument;
(b) the By-Laws of the Company;
(c) resolutions of the Board of Trustees of the Company authorizing
the execution and delivery of this Agreement;
(d) the most recent Post-Effective Amendment to the Company's
Registration Statement under the Securities Act of 1933, as
amended (the "1933 Act"), and the 1940 Act, on Form N-1A as filed
with the Securities and Exchange Commission (the "Commission");
(e) Notification of Registration of the Company under the 1940 Act on
Form N-8A as filed with the Commission;
(f) the currently effective Prospectuses and Statements of Additional
Information of the Funds; and
<PAGE>
(g) a copy of all applicable orders granted to the Company by the
Commission or any no-action letter or similar correspondence
concerning the Company or any of its Funds including an order
under section 6(c) of the 1940 Act dated December 31, 1996
granting the Fund an exemption from (1) the shareholder voting
requirements of Section 15(a) and Rule 18f-2; and (2) the
disclosure requirements under various rules and forms (the
"Manager of Managers Order").
2. APPOINTMENT.
(a) General. The Company hereby appoints the Adviser to act as
investment adviser to the Funds for the period and on the terms
set forth in this Agreement. The Adviser accepts such appointment
and agrees to furnish the services herein set forth for the
compensation herein provided.
(b) Employees of Affiliates. The Adviser may, in its discretion,
provide such services through its own employees or the employees
of one or more affiliated companies that are qualified to act as
an investment adviser to the Company under applicable laws and
are under the control of KeyCorp, the indirect parent of the
Adviser; provided that (i) all persons, when providing services
hereunder, are functioning as part of an organized group of
persons, and (ii) such organized group of persons is managed at
all times by authorized officers of the Adviser.
(c) Sub-Advisers. It is understood and agreed that the Adviser may
from time to time employ or associate with such other entities or
persons as the Adviser believes appropriate to assist in the
performance of this Agreement with respect to a particular Fund
or Funds (each a "Sub-Adviser"), and that any such Sub-Adviser
shall have all of the rights and powers of the Adviser set forth
in this Agreement; provided that a Fund shall not pay any
additional compensation for any Sub-Adviser and the Adviser shall
be as fully responsible to the Company for the acts and omissions
of the Sub-Adviser as it is for its own acts and omissions. The
Adviser will review, monitor and report to the Company's Board of
Trustees regarding the performance and investment procedures of
any Sub-Adviser. In the event that the services of any
Sub-Adviser are terminated, the Adviser may provide investment
advisory services pursuant to this Agreement to the Fund without
a Sub-Adviser or employ another Sub-Adviser. The Adviser may
select another Sub-Adviser without further shareholder approval
to the extent consistent with the Manager of Managers Order. A
Sub-Adviser may be an affiliate of the Adviser.
2
<PAGE>
3. INVESTMENT ADVISORY SERVICES.
(a) Management of the Funds. The Adviser hereby undertakes to act as
investment adviser to the Funds. The Adviser shall regularly
provide investment advice to the Funds and continuously supervise
the investment and reinvestment of cash, securities and other
property composing the assets of the Funds and, in furtherance
thereof, shall:
(i) supervise all aspects of the operations of the Company and
each Fund;
(ii) obtain and evaluate pertinent economic, statistical and
financial data, as well as other significant events and
developments, which affect the economy generally, the Funds'
investment programs, and the issuers of securities included
in the Funds' portfolios and the industries in which they
engage, or which may relate to securities or other
investments which the Adviser may deem desirable for
inclusion in a Fund's portfolio;
(iii) determine which issuers and securities shall be included in
the portfolio of each Fund;
(iv) furnish a continuous investment program for each Fund;
(v) in its discretion and without prior consultation with the
Company, buy, sell, lend and otherwise trade any stocks,
bonds and other securities and investment instruments on
behalf of each Fund; and
(vi) take, on behalf of each Fund, all actions the Adviser may
deem necessary in order to carry into effect such investment
program and the Adviser's functions as provided above,
including the making of appropriate periodic reports to the
Company's Board of Trustees.
(b) Manager of Managers Structure. To the exent the a Fund has
adopted adopts a "manager of managers" structure in reliance on
the Manager of Manager Order, subject to the review of the Board
of Trustees, the Adviser shall:
(i) provide general management and administrative services to
such Fund;
(ii) set each Fund's overall investment strategies;
(iii) recommend Sub-Advisers;
(iv) allocate and, when appropriate, reallocate each Fund's
assets among Sub-Advisers;
3
<PAGE>
(v) monitor and evaluate Sub-Adviser performance; and
(vi) oversee Sub-Adviser compliance with each Fund's investment
objective, policies and restrictions.
(c) Covenants. The Adviser shall carry out its investment advisory
and supervisory responsibilities in a manner consistent with the
investment objectives, policies, and restrictions provided in:
(i) each Fund's Prospectus and Statement of Additional
Information as revised and in effect from time to time; (ii) the
Company's Trust Instrument, By-Laws or other governing
instruments, as amended from time to time; (iii) the 1940 Act;
(iv) other applicable laws; and (v) such other investment
policies, procedures and/or limitations as may be adopted by the
Company with respect to a Fund and provided to the Adviser in
writing. The Adviser agrees to use reasonable efforts to manage
each Fund so that it will qualify, and continue to qualify, as a
regulated investment company under Subchapter M of the Internal
Revenue Code of 1986, as amended, and regulations issued
thereunder (the "Code"), except as may be authorized to the
contrary by the Company's Board of Trustees. The management of
the Funds by the Adviser shall at all times be subject to the
review of the Company's Board of Trustees.
(d) Books and Records. Pursuant to applicable law, the Adviser shall
keep each Fund's books and records required to be maintained by,
or on behalf of, the Funds with respect to advisory services
rendered hereunder. The Adviser agrees that all records which it
maintains for a Fund are the property of the Fund and it will
promptly surrender any of such records to the Fund upon the
Fund's request. The Adviser further agrees to preserve for the
periods prescribed by Rule 31a-2 under the 1940 Act any such
records of the Fund required to be preserved by such Rule.
(e) Reports, Evaluations and other Services. The Adviser shall
furnish reports, evaluations, information or analyses to the
Company with respect to the Funds and in connection with the
Adviser's services hereunder as the Company's Board of Trustees
may request from time to time or as the Adviser may otherwise
deem to be desirable. The Adviser shall make recommendations to
the Company's Board of Trustees with respect to Company policies,
and shall carry out such policies as are adopted by the Board of
Trustees. The Adviser shall, subject to review by the Board of
Trustees, furnish such other services as the Adviser shall from
time to time determine to be necessary or useful to perform its
obligations under this Agreement.
(f) Purchase and Sale of Securities. The Adviser shall place all
orders for the purchase and sale of portfolio securities for each
Fund with brokers or dealers selected by the Adviser, which may
include brokers or dealers affiliated with the Adviser to the
extent permitted by the 1940 Act and the Company's policies and
procedures applicable to the Funds. The Adviser shall use its
best efforts to seek to execute portfolio transactions at prices
which, under the circumstances, result in total costs
4
<PAGE>
or proceeds being the most favorable to the Funds. In assessing
the best overall terms available for any transaction, the Adviser
shall consider all factors it deems relevant, including the
breadth of the market in the security, the price of the security,
the financial condition and execution capability of the broker or
dealer, research services provided to the Adviser, and the
reasonableness of the commission, if any, both for the specific
transaction and on a continuing basis. In no event shall the
Adviser be under any duty to obtain the lowest commission or the
best net price for any Fund on any particular transaction, nor
shall the Adviser be under any duty to execute any order in a
fashion either preferential to any Fund relative to other
accounts managed by the Adviser or otherwise materially adverse
to such other accounts.
(g) Selection of Brokers or Dealers. In selecting brokers or dealers
qualified to execute a particular transaction, brokers or dealers
may be selected who also provide brokerage and research services
(as those terms are defined in Section 28(e) of the Securities
Exchange Act of 1934) to the Adviser and/or the other accounts
over which the Adviser exercises investment discretion. The
Adviser is authorized to pay a broker or dealer who provides such
brokerage and research services a commission for executing a
portfolio transaction for the Fund which is in excess of the
amount of commission another broker or dealer would have charged
for effecting that transaction if the Adviser determines in good
faith that the total commission is reasonable in relation to the
value of the brokerage and research services provided by such
broker or dealer, viewed in terms of either that particular
transaction or the overall responsibilities of the Adviser with
respect to accounts over which it exercises investment
discretion. The Adviser shall report to the Board of Trustees of
the Company regarding overall commissions paid by the Fund and
their reasonableness in relation to their benefits to the Fund.
Any transactions for the Fund that are effected through an
affiliated broker-dealer on a national securities exchange of
which such broker-dealer is a member will be effected in
accordance with Section 11(a) of the Securities Exchange Act of
1934, as amended, and the regulations promulgated thereunder,
including Rule 11a2-2(T). The Fund hereby authorizes any such
broker or dealer to retain commissions for effecting such
transactions and to pay out of such retained commissions any
compensation due to others in connection with effectuating those
transactions.
(h) Aggregation of Securities Transactions. In executing portfolio
transactions for a Fund, the Adviser may, to the extent permitted
by applicable laws and regulations, but shall not be obligated
to, aggregate the securities to be sold or purchased with those
of other Funds or its other clients if, in the Adviser's
reasonable judgment, such aggregation (i) will result in an
overall economic benefit to the Fund, taking into consideration
the advantageous selling or purchase price, brokerage commission
and other expenses, and trading requirements, and (ii) is not
inconsistent with the policies set forth in the Company's
Registration Statement and the Fund's Prospectus and Statement of
Additional Information. In such event, the
5
<PAGE>
Adviser will allocate the securities so purchased or sold, and
the expenses incurred in the transaction, in an equitable manner,
consistent with its fiduciary obligations to the Fund and such
other clients.
4. REPRESENTATIONS AND WARRANTIES.
(a) The Adviser hereby represents and warrants to the Company as
follows:
(i) The Adviser is a corporation duly organized and in good
standing under the laws of the State of New York and is
fully authorized to enter into this Agreement and carry
out its duties and obligations hereunder.
(ii) The Adviser is registered as an investment adviser with
the Commission under the Investment Advisers Act of 1940,
as amended (the "Advisers Act"), and is registered or
licensed as an investment adviser under the laws of all
applicable jurisdictions. The Adviser shall maintain such
registrations or licenses in effect at all times during
the term of this Agreement.
(iii) The Adviser at all times shall provide its best judgment
and effort to the Company in carrying out the Adviser's
obligations hereunder.
(b) The Company hereby represents and warrants to the Adviser as
follows:
(i) The Company has been duly organized as a business trust
under the laws of the State of Delaware and is authorized
to enter into this Agreement and carry out its terms.
(ii) The Company is registered as an investment company with
the Commission under the 1940 Act and shares of each Fund
are registered for offer and sale to the public under the
1933 Act and all applicable state securities laws where
currently sold. Such registrations will be kept in effect
during the term of this Agreement.
5. COMPENSATION. As compensation for the services which the Adviser is
to provide or cause to be provided pursuant to Paragraph 3, each Fund shall pay
to the Adviser out of Fund assets an annual fee, computed and accrued daily and
paid in arrears on the first business day of every month, at the rate set forth
opposite each Fund's name on Schedule A, which shall be a percentage of the
average daily net assets of the Fund (computed in the manner set forth in the
Fund's most recent Prospectus and Statement of Additional Information)
determined as of the close of business on each business day throughout the
month. At the request of the Adviser, some or all of such fee shall be paid
directly to a Sub-Adviser. The fee for any partial month under this Agreement
shall be calculated on a proportionate basis. In the event that the total
expenses of a
6
<PAGE>
Fund exceed the limits on investment company expenses imposed by
any statute or any regulatory authority of any jurisdiction in which shares of
such Fund are qualified for offer and sale, the Adviser will bear the amount of
such excess, except: (i) the Adviser shall not be required to bear such excess
to an extent greater than the compensation due to the Adviser for the period for
which such expense limitation is required to be calculated unless such statute
or regulatory authority shall so require, and (ii) the Adviser shall not be
required to bear the expenses of the Fund to an extent which would result in the
Fund's or Company's inability to qualify as a regulated investment company under
the provisions of Subchapter M of the Code.
6. INTERESTED PERSONS. It is understood that, to the extent consistent
with applicable laws, the Trustees, officers and shareholders of the Company are
or may be or become interested in the Adviser as directors, officers or
otherwise and that directors, officers and shareholders of the Adviser are or
may be or become similarly interested in the Company.
7. EXPENSES. As between the Adviser and the Funds, the Funds will pay
for all their expenses other than those expressly stated to be payable by the
Adviser hereunder, which expenses payable by the Funds shall include, without
limitation, (i) interest and taxes; (ii) brokerage commissions and other costs
in connection with the purchase or sale of securities and other investment
instruments, which the parties acknowledge might be higher than other brokers
would charge when a Fund utilizes a broker which provides brokerage and research
services to the Adviser as contemplated under Paragraph 3 above; (iii) fees and
expenses of the Company's Trustees who are not employees of the Adviser; (iv)
legal and audit expenses; (v) administrator, custodian, pricing and bookkeeping,
registrar and transfer agent fees and expenses; (vi) fees and expenses related
to the registration and qualification of the Funds' shares for distribution
under state and federal securities laws; (vii) expenses of printing and mailing
reports and notices and proxy material to shareholders, unless otherwise
required; (viii) all other expenses incidental to holding meetings of
shareholders, including proxy solicitations therefor, unless otherwise required;
(ix) expenses of typesetting for printing Prospectuses and Statements of
Additional Information and supplements thereto; (x) expenses of printing and
mailing Prospectuses and Statements of Additional Information and supplements
thereto sent to existing shareholders; (xi) insurance premiums for fidelity
bonds and other coverage to the extent approved by the Company's Board of
Trustees; (xii) association membership dues authorized by the Company's Board of
Trustees; and (xiii) such non-recurring or extraordinary expenses as may arise,
including those relating to actions, suits or proceedings to which the Company
is a party (or to which the Funds' assets are subject) and any legal obligation
for which the Company may have to provide indemnification to the Company's
Trustees and officers.
8. NON-EXCLUSIVE SERVICES; LIMITATION OF ADVISER'S LIABILITY. The
services of the Adviser to the Funds are not to be deemed exclusive and the
Adviser may render similar services to others and engage in other activities.
The Adviser and its affiliates may enter into other agreements with the Funds
and the Company for providing additional services to the Funds and the Company
which are not covered by this Agreement, and to receive additional compensation
for such services.
7
<PAGE>
In the absence of willful misfeasance, bad faith, gross negligence or reckless
disregard of obligations or duties hereunder on the part of the Adviser, or a
breach of fiduciary duty with respect to receipt of compensation, neither the
Adviser nor any of its directors, officers, shareholders, agents, or employees
shall be liable or responsible to the Company, the Funds or to any shareholder
of the Funds for any error of judgment or mistake of law or for any act or
omission in the course of, or connected with, rendering services hereunder or
for any loss suffered by the Company, a Fund or any shareholder of a Fund in
connection with the performance of this Agreement.
9. EFFECTIVE DATE; MODIFICATIONS; TERMINATION. This Agreement shall
become effective on the date of its execution, provided that it shall have been
approved by a majority of the outstanding voting securities of each Fund, in
accordance with the requirements of the 1940 Act.
(a) The Agreement shall continue in force for a period of two years
from the date of its execution. Thereafter, this Agreement shall
continue in effect as to each Fund for successive annual periods,
provided such continuance is specifically approved at least
annually (i) by a vote of the majority of the Trustees of the
Company who are not parties to this Agreement or interested
persons of any such party, cast in person at a meeting called for
the purpose of voting on such approval and (ii) by a vote of the
Board of Trustees of the Company or a majority of the outstanding
voting shares of the Fund.
(b) The modification of any of the non-material terms of this
Agreement may be approved by a vote of a majority of those
Trustees of the Company who are not interested persons of any
party to this Agreement, cast in person at a meeting called for
the purpose of voting on such approval.
(c) Notwithstanding the foregoing provisions of this Paragraph 9,
either party hereto may terminate this Agreement at any time on
sixty (60) days' prior written notice to the other, without
payment of any penalty. Such a termination by the Company may be
effected severally as to any particular Fund, and shall be
effected as to any Fund by vote of the Company's Board of
Trustees or by vote of a majority of the outstanding voting
securities of the Fund. This Agreement shall terminate
automatically in the event of its assignment.
10. LIMITATION OF LIABILITY OF TRUSTEES AND SHAREHOLDERS. The Adviser
acknowledges the following limitation of liability:
The terms "The Victory Portfolios" and "Trustees" refer, respectively,
to the trust created and the Trustees, as trustees but not individually or
personally, acting from time to time under the Trust Instrument, to which
reference is hereby made and a copy of which is on file at the office of the
Secretary of State of the State of Delaware, such reference being inclusive of
any and all amendments thereto so filed or hereafter filed. The obligations of
"The Victory Portfolios" entered
8
<PAGE>
into in the name or on behalf thereof by any of the Trustees, representatives or
agents are made not individually, but in such capacities and are not binding
upon any of the Trustees, shareholders or representatives of the Company
personally, but bind only the assets of the Company, and all persons dealing
with the Company or a Fund must look solely to the assets of the Company or Fund
for the enforcement of any claims against the Company or Fund.
11. SERVICE MARK. The service mark of the Company and the name "Victory"
(and derivatives thereof) have been licensed to the Company by KeyCorp, through
its subsidiary Key Trust Company ("Key Trust"), an affiliate of the Adviser,
pursuant to a License Agreement dated June 21, 1993, and their continued use is
subject to the right of Key Trust to withdraw this permission under the License
Agreement in the event the Adviser or another subsidiary of KeyCorp is not the
investment adviser to the Company.
12. CERTAIN DEFINITIONS. The terms "vote of a majority of the
outstanding voting securities," "assignment," "control," and "interested
persons," when used herein, shall have the respective meanings specified in the
1940 Act. References in this Agreement to the 1940 Act and the Advisers Act
shall be construed as references to such laws as now in effect or as hereafter
amended, and shall be understood as inclusive of any applicable rules,
interpretations and/or orders adopted or issued thereunder by the Commission.
13. INDEPENDENT CONTRACTOR. The Adviser shall for all purposes herein be
deemed to be an independent contractor and shall, unless otherwise expressly
provided herein or authorized by the Board of Trustees of the Company from time
to time, have no authority to act for or represent a Fund in any way or
otherwise be deemed an agent of a Fund.
14. STRUCTURE OF AGREEMENT. The Company is entering into this Agreement
on behalf of the respective Funds severally and not jointly. The
responsibilities and benefits set forth in this Agreement shall refer to each
Fund severally and not jointly. No Fund shall have any responsibility for any
obligation of any other Fund arising out of this Agreement. Without otherwise
limiting the generality of the foregoing:
(a) any breach of any term of this Agreement regarding the Company
with respect to any one Fund shall not create a right or
obligation with respect to any other Fund;
(b) under no circumstances shall the Adviser have the right to set
off claims relating to a Fund by applying property of any other
Fund; and
(c) the business and contractual relationships created by this
Agreement, consideration for entering into this Agreement, and
the consequences of such relationship and consideration relate
solely to the Company and the particular Fund to which such
relationship and consideration applies.
9
<PAGE>
This Agreement is intended to govern only the relationships between the
Adviser, on the one hand, and the Company and the Funds, on the other hand, and
(except as specifically provided above in this Paragraph 14) is not intended to
and shall not govern (i) the relationship between the Company and any Fund or
(ii) the relationships among the respective Funds.
15. GOVERNING LAW. This Agreement shall be governed by the laws of the
State of Ohio, provided that nothing herein shall be construed in a manner
inconsistent with the 1940 Act or the Advisers Act.
16. SEVERABILITY. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby and, to this extent, the provisions
of this Agreement shall be deemed to be severable.
17. NOTICES. Notices of any kind to be given to the Company hereunder by
the Adviser shall be in writing and shall be duly given if mailed or delivered
to 3435 Stelzer Road, Columbus, Ohio 43219-3035, Attention: Michael J. Sullivan;
with a copy to Kramer, Levin, Naftalis & Frankel, 919 Third Avenue, New York,
New York, 10022, Attention: Carl Frischling, Esq., or at such other address or
to such individual as shall be so specified by the Company to the Adviser.
Notices of any kind to be given to the Adviser hereunder by the Company shall be
in writing and shall be duly given if mailed or delivered to the Adviser at 127
Public Square, Cleveland, Ohio 44114-1306, Attention: William G. Spears, with a
copy to William J. Blake, Esq., or at such other address or to such individual
as shall be so specified by the Adviser to the Company. Notices shall be
effective upon delivery.
10
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the date
written above.
THE VICTORY PORTFOLIOS KEY ASSET MANAGEMENT INC.
on behalf of the Funds listed on
Schedule A, individually and not
jointly
By: /s/Michaeal J. Sullivan By: /s/Kathleen A. Dennis
----------------------- ---------------------
Name: Michael J. Sullivan Name: Kathleen A. Dennis
Title: Secretary Title: Senior Managing Director
11
<PAGE>
Schedule A
Name of Fund Fee*
- ------------ ----
1. The Victory International Growth Fund 1.10%
- --------------
* As a percentage of average daily net assets. Note, however, that the
Adviser shall have the right, but not the obligation, to voluntarily
waive any portion of the advisory fee from time to time. Any such
voluntary waiver will be irrevocable and determined in advance of
rendering investment advisory services by the Adviser, and shall be in
writing and signed by the parties hereto.
DISTRIBUTION AGREEMENT
This Distribution Agreement is made as of this 1st day of June , 1996
between THE VICTORY PORTFOLIOS, a Delaware business trust (herein called the
"Trust"), and BISYS Fund Services Limited Partnership, a Delaware corporation
(herein called the "Distributor").
WHEREAS, the Trust is an open-end management investment company and is
so registered under the Investment Company Act of 1940; and
WHEREAS, the Trust desires to retain the Distributor as Distributor for
each of the Trust's separate portfolios set forth on Schedule I hereto, as such
Schedule may be revised from time to time (individually known as a "Fund" and
collectively as the "Funds") to provide for the sale and distribution of shares
of beneficial interest without par value of the Funds (herein collectively
called "Shares"), and the Distributor is willing to render such services;
NOW THEREFORE, in consideration of the premises and mutual convenants
set forth herein the parties hereto agree as follows:
I. DELIVERY OF DOCUMENTS
The Trust has delivered to the Distributor copies of each of the
following documents and will deliver to it all future amendments and supplements
thereto, if any:
(a) The Trust's Certificate of Trust and all amendments
thereto (such Certificate of Trust, as presently in effect and as it
shall from time to time be amended, herein called the "Trust's
Certificate");
(b) The By-Laws of the Trust (such By-Laws, as presently in
effect and as they shall from time to time be amended, herein called
the "By-Laws");
(c) Resolutions of the Board of Trustees of the Trust
authorizing the execution and delivery of this Agreement;
(d) The Trust's most recent Post-Effective Amendment to its
Registration Statement under the Securities Act of 1933, as amended
(the "1933 Act"), and under the Investment Company Act of 1940, as
amended (the "1940 Act"), on Form N-1A as filed with the Securities and
Exchange Commission (the "Commission") and all subsequent amendments
thereto (said Registration Statement, as presently in effect and as
amended or supplemented from time to time, is herein called the
"Registration Statement");
<PAGE>
(e) Notification of Registration of the Trust under the 1940
Act on Form N-8A as filed with the Commission; and
(f) Prospectuses and Statements of Additional Information of
the Funds (such prospectuses and statements of additional information,
as presently filed with the Securities and Exchange Commission and as
they shall from time to time be amended and supplemented, herein called
individually the "Prospectus" and collectively the "Prospectuses").
II. DISTRIBUTION
1. APPOINTMENT OF DISTRIBUTOR. The Trust hereby appoints the
Distributor as Principal Distributor of the Fund's Shares and the Distributor
hereby accepts such appointment and agrees to render the services and duties set
forth in this Section II.
2. SERVICES AND DUTIES.
(a) The Trust agrees to sell through the Distributor, as
agent, from time to time during the term of this Agreement, Shares of
the Funds (whether authorized but unissued or treasury shares, in the
Trust's sole discretion) upon the terms and at the current offering
price as described in the applicable Prospectus. The Distributor will
act only in its own behalf as principal in making agreements with
selected dealers or others for the sale and redemption of Shares, and
shall sell Shares only at the offering price thereof as set forth in
the applicable Prospectus. The Distributor shall devote its best
efforts to effect sales of Shares of each of the Funds, but shall not
be obligated to sell any certain number of Shares. Each Fund reserves
the right to issue Shares in connection with any merger or
consolidation of the Trust or any Fund with any other investment
company or personal holding company or in connection with offers of
exchange exempted from Section 11(a) of the 1940 Act.
(b) In all matters relating to the sale and redemption of
Shares, the Distributor will act in conformity with the Trust's
Certificate, By-Laws, and Prospectuses and with the instructions and
directions of the Board of Trustees of the Trust and will conform to
and comply with the requirements of the 1933 Act, the 1940 Act, the
regulations of the National Association of Securities Dealers, Inc. and
all other applicable federal or state laws and regulations. In
connection with such sales, the Distributor acknowledges and agrees
that it is not authorized to provide any information or make any
representations other than as contained in the Trust's Registration
Statement and Prospectuses and any sales literature specifically
approved by the Trust. The Trust shall not be responsible in any way
for any information, statements or representations given or made by
2
<PAGE>
the Distributor or its representatives or agents other than such
information, statements or representations contained in the
Prospectuses or other financial statements of the Trust or in any sales
literature or advertisements specifically approved by the Trust.
(c) The Distributor will bear the cost of (i) printing and
distributing any Prospectus (including any supplement thereto) to
persons who are not either shareholders or counsel, independent
accountants or other persons providing similar services to the Trust,
and (ii) preparing, printing and distributing any literature,
advertisement or material which is primarily intended to result in the
sale of the Shares; provided, however, that the Distributor shall not
be obligated to bear the expenses incurred by the Trust in connection
with the preparation and printing of any amendment to any Registration
Statement or Prospectus necessary for the continued effective
registration of the Shares under the 1933 Act; and provided further,
that each Fund will bear the expenses incurred and other payments made
in accordance with the provisions of this Agreement and any plan now in
existence or hereafter adopted with respect to such Fund, or any class
or classes of shares of such Fund, pursuant to Rule 12b-1 under the
1940 Act (collectively, the "Plans").
(d) The Distributor agrees to be responsible for implementing
and/or operating the Plans in accordance with the terms thereof.
(e) All Shares of the Funds offered for sale by the
Distributor shall be offered for sale to the public at a price per
Share (the "offering price") equal to (i) their net asset value
(determined in the manner set forth in the Trust's Certificate and then
current Prospectuses) plus (ii) a sales charge (if any) which shall be
the percentage of the offering price of such Shares as set forth in the
Trust's then current Prospectuses. The offering price, if not an exact
multiple of one cent, shall be adjusted to the nearest cent. If a sales
charge is in effect, the Distributor shall have the right to pay a
portion of the sales charge to broker-dealers and other persons who
have sold Shares of the Funds. Concessions by the Distributor to
broker-dealers and other persons shall be set forth in either the
selling agreements between the Distributor and such broker-dealers and
persons or, if such concessions are described in the then current
Prospectuses, shall be as so set forth. No broker-dealer or other
person who enters into a selling agreement with the Distributor shall
be authorized to act as agent for the Trust in connection with the
offering or sale of its Shares to the public or otherwise.
(f) If any Shares sold by the Distributor under the terms of
this Agreement are redeemed or repurchased by the
3
<PAGE>
Trust or by the Distributor as agent or are tendered for redemption
within seven business days after the date of confirmation of the
original purchase of said Shares, the Distributor shall forfeit the
amount (if any) of the net asset value received by it in respect of
such Shares, provided that the portion, if any, of such amount (if any)
re-allowed by the Distributor to broker-dealers or other persons shall
be repayable to the Trust only to the extent recovered by the
Distributor from the broker-dealer or other person concerned. The
Distributor shall include in the forms of agreement with such
broker-dealers and other persons a corresponding provision for the
forfeiture by them of their concession with respect to Shares sold by
them or their principals and redeemed or repurchased by the Trust or by
the Distributor as agent (or tendered for redemption) within seven
business days after the date of confirmation of such initial purchases.
3. SALES AND REDEMPTIONS.
(a) The Trust shall pay all costs and expenses in connection
with the registration of the Shares under the 1933 Act, and all
expenses in connection with maintaining facilities for the issue and
transfer of the Shares and for supplying information, prices and other
data to be furnished by the Trust hereunder, and all expenses in
connection with preparing, printing and distributing the Prospectus
except as set forth in subsection 2(c) of Section II hereof.
(b) The Trust shall execute all documents, furnish all
information and otherwise take all actions which may be reasonably
necessary in the discretion of the Trust's officers in connection with
the qualification of the Shares for sale in such states as the
Distributor may designate to the Trust and the Trust may approve, and
the Trust shall pay all filing fees which may be incurred in connection
with such qualification. The Distributor shall pay all expenses
connected with its qualification as a dealer under state or federal
laws and, except as otherwise specifically provided in this Agreement,
all other expenses incurred by the Distributor in connection with the
sale of the Shares as contemplated in this Agreement. It is understood
that certain advertising, marketing, shareholder servicing,
administration and/or distribution expenses to be incurred in
connection with the Shares will be paid by the Funds as provided in
this Agreement and in the Plans relating thereto.
(c) The Trust shall have the right to suspend the sale of
Shares of any Fund at any time in response to conditions in the
securities markets or otherwise, and to suspend the redemption of
Shares of any Fund at any time permitted by the 1940 Act or the rules
of the Commission ("Rules").
4
<PAGE>
(d) The Trust reserves the right to reject any order for
Shares.
III. LIMITATION OF LIABILITY
The Distributor shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Trust or any Fund in connection
with the matters to which this Agreement relates, except a loss resulting from
willful misfeasance, bad faith or negligence on its part in the performance of
its duties or from reckless disregard by it of its obligations and duties under
this Agreement.
IV. CONFIDENTIALITY
The Distributor will treat confidentially and as proprietary
information of the Trust all records and other information relative to the
Trust, to the Trust's prior or present shareholders and to those persons or
entities who respond to the Distributor's inquiries concerning investment in the
Trust, and except as provided below, will not use such records and information
for any purpose other than the performance of its responsibilities and duties
hereunder or the performance of its responsibilities and duties with regard to
sales of the shares of any Fund which may be added to the Trust in the future.
Any other use by the Distributor of the information and records referred to
above may be made only after prior notification to and approval in writing by
the Trust. Such approval shall not be unreasonably withheld and may not be
withheld where (i) the Distributor may be exposed to civil or criminal contempt
proceedings for failure to divulge such information; (ii) the Distributor is
requested to divulge such information by duly constituted authorities; or (iii)
the Distributor is so requested by the Trust.
V. INDEMNIFICATION
1. TRUST REPRESENTATIONS. The Trust represents and warrants to the
Distributor that at all times the Registration Statement and Prospectuses will
in all material respects conform to the applicable requirements of the 1933 Act
and the Rules and will not include any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading, except that no representation or warranty in this
subsection shall apply to statements or omissions made in reliance upon and in
conformity with written information furnished to the Trust by or on behalf of
and with respect to the Distributor expressly for use in the Registration
Statement or Prospectuses.
2. DISTRIBUTOR REPRESENTATIONS. The Distributor represents and warrants
to the Trust that it is duly organized as a Delaware corporation and is and at
all times will remain duly authorized and licensed to carry out its services as
contemplated herein.
5
<PAGE>
3. TRUST INDEMNIFICATION. The Trust will indemnify, defend and hold
harmless the Distributor, its several officers and directors, and any person who
controls the Distributor within the meaning of Section 15 of the 1933 Act, from
and against any losses, claims, damages or liabilities, joint or several, to
which any of them may become subject under the 1933 Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions or proceedings in
respect thereof) arise out of, or are based upon, any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement, the Prospectuses or in any application or other document executed by
or on behalf of the Trust, or arise out of, or are based upon, information
furnished by or on behalf of the Trust filed in any state in order to qualify
the Shares under the securities or blue sky laws thereof ("Blue Sky
Application"), or arise out of, or are based upon, the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will reimburse the
Distributor, its several officers and directors, and any person who controls the
Distributor within the meaning of Section 15 of the 1933 Act, for any legal or
other expenses reasonably incurred by any of them in investigating, defending,
or preparing to defend any such action, proceeding or claim; provided, however,
that the Trust shall not be liable in any case to the extent that such loss,
claim, damage or liability arises out of, or is based upon, any untrue
statement, alleged untrue statement, or omission or alleged omission made in the
Registration Statement, the Prospectuses, any Blue Sky Application or any
application or other document executed by or on behalf of the Trust in reliance
upon and in conformity with written information furnished to the Trust by or on
behalf of and with respect to the Distributor specifically for inclusion
therein.
The Trust shall not indemnify any person pursuant to this subsection 3
unless the court or other body before which the proceeding was brought has
rendered a final decision on the merits that such person was not liable by
reason of his willful misfeasance, bad faith or negligence in the performance of
his duties, or his reckless disregard of obligations and duties, under this
Agreement ("disabling conduct") or, in the absence of such a decision, a
reasonable determination (based upon a review of the facts) that such person was
not liable by reason of disabling conduct has been made by the vote of a
majority of a quorum of trustees of the Trust who are neither "interested
persons" of the Trust (as defined in the 1940 Act) nor parties to the
proceeding, or by an independent legal counsel in a written opinion.
Each Fund shall advance attorney's fees and other expenses incurred by
any person in defending any claim, demand, action or suit which is the subject
of a claim for indemnification pursuant to this subsection 3, so long as: (i)
such person shall undertake to repay all such advances unless it is ultimately
determined
6
<PAGE>
that he is entitled to indemnification hereunder; and (ii) such person shall
provide security for such undertaking, or the Fund shall be insured against
losses arising by reason of any lawful advances, or a majority of a quorum of
the disinterested, nonparty trustees of the Trust (or an independent legal
counsel in a written opinion) shall determine based on a review of readily
available facts (as opposed to a full trial-type inquiry) that there is reason
to believe that such person ultimately will be found entitled to indemnification
hereunder.
4. DISTRIBUTOR INDEMNIFICATION. The Distributor will indemnify, defend
and hold harmless the Trust, the Trust's several officers and trustees and any
person who controls the Trust within the meaning of Section 15 of the 1933 Act,
from and against any losses, claims, damages or liabilities, joint or several,
to which any of them may become subject under the 1933 Act or otherwise, insofar
as such losses, claims, damages or liabilities (or actions or proceedings in
respect hereof) arise out of, or are based upon, any breach of its
representations and warranties in subsection 2 hereof or its agreements in
subsection 2 of Section II hereof, or which arise out of, or are based upon, any
untrue statement or alleged untrue statement of a material fact contained in the
Registration Statement, the Prospectuses, any Blue Sky Application or any
application or other document executed by or on behalf of the Trust, or the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, which
statement or omission or alleged statement or alleged omission was made in
reliance upon or in conformity with information furnished in writing to the
Trust or any of its several officers and trustees by or on behalf of and with
respect to the Distributor specifically for inclusion therein, and will
reimburse the Trust, the Trust's several officers and trustees, and any person
who controls the Trust within the meaning of Section 15 of the 1933 Act, for any
legal or other expenses reasonably incurred by any of them in investigating,
defending or preparing to defend any such action, proceeding or claim.
5. GENERAL INDEMNITY PROVISIONS. No indemnifying party shall be liable
under its indemnity agreement contained in subsection 3 or 4 hereof with respect
to any claim made against such indemnifying party unless the indemnified party
shall have notified the indemnifying party in writing within a reasonable time
after the summons or other first legal process giving information of the nature
of the claim shall have been served upon the indemnified party (or after the
indemnified party shall have received notice of such service on any designated
agent), but failure to notify the indemnifying party of any such claim shall not
relieve it from any liability which it may otherwise have to the indemnified
party. The indemnifying party will be entitled to participate at its own expense
in the defense or, if it so elects, to assume the defense of any suit brought to
enforce any such liability, and if the indemnifying party elects
7
<PAGE>
to assume the defense, such defense shall be conducted by counsel chosen by it
and reasonably satisfactory to the indemnified party. In the event the
indemnifying party elects to assume the defense of any such suit and retain such
counsel, the indemnified party shall bear the fees and expenses of any
additional counsel retained by the indemnified party.
VI. DURATION AND TERMINATION
This Agreement shall become effective as of the date first above
written, and, unless sooner terminated as provided herein, shall continue until
May 31, 1998. Thereafter, if not terminated, this Agreement shall continue
automatically for successive terms of one year, provided that such continuance
is specifically approved at least annually (a) by a majority of those members of
the Board of Trustees of the Trust who are not parties to this Agreement or
"interested persons" of any such party (the "Disinterested Trustees"), pursuant
to a vote cast in person at a meeting called for the purpose of voting on such
approval, and (b) by the Board of Trustees of the Trust or by vote of a
"majority of the outstanding voting securities" of the Trust. Notwithstanding
anything to the contrary contained in this Section VI, this Agreement may be
terminated by the Trust at any time with respect to any Fund, without the
payment of any penalty, by vote of a majority of the Disinterested Trustees or
by vote of a "majority of the outstanding voting securities" of such Fund on 60
days' written notice to the Distributor, or by the Distributor at any time,
without the payment of any penalty, on 60 days' written notice to the Trust.
This Agreement will automatically terminate in the event of its "assignment."
(As used in this Agreement, the terms "majority of the outstanding voting
securities," "interested person" and "assignment" shall have the same meanings
as such terms have in the 1940 Act.)
VII. AMENDMENT OF THIS AGREEMENT
No provision of this Agreement may be changed, waived, discharged or
terminated except by an instrument in writing signed by the party against which
an enforcement of the change, waiver, discharge or termination is sought.
VIII. NOTICES
Notices of any kind to be given to the Trust hereunder by the
Distributor shall be in writing and shall be duly given if mailed or delivered
to the Trust c/o Mutual Fund Products, KeyCorp Management Company, 127 Public
Square, Cleveland, Ohio 44114, with a copy to Kramer, Levin, Naftalis & Frankel,
919 Third Avenue, New York, New, York 10022, Attention: Carl Frischling,
Esquire, or at such other address or to such individual as shall be so specified
by the Trust to the Distributor. Notices of any kind to be given to the
Distributor hereunder by the Trust shall be in writing and shall be duly given
if mailed or delivered to the Distributor at 3534 Stelzer
8
<PAGE>
Road, Columbus, Ohio 43219, Attention: Stephen G. Mintos, Chief Executive
Officer, or at such other address or to such individual as shall be so specified
by the Distributor to the Trust.
IX. COMPENSATION
The Distributor shall not receive compensation with respect to the
provision of distribution services under this Agreement; provided, however, that
the Distributor shall be entitled to receive payments, if any, under the Plans
in accordance with the terms thereof and payments, if any, of sales charges as
set forth in the Trust's Prospectuses. The Trust is entering into this Agreement
on behalf of the Funds listed on Schedule I severally and not jointly. The
responsibilities and benefits set forth in this Agreement shall refer to each
Fund severally and not jointly. No individual Fund shall have any responsibility
for any obligation, if any, with respect to any other Fund arising out of this
Agreement.
X. MISCELLANEOUS
1. CONSTRUCTION. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. Subject to the provisions of Section VI hereof, this Agreement
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective successors and shall be governed by New York law; provided,
however, that nothing herein shall be construed in a manner inconsistent with
the Investment Company Act of 1940 or any rule or regulation of the Commission
thereunder.
2. NAMES. The names "The Victory Portfolios" and "Trustees of The
Victory Portfolios" refer respectively to the Trust created and the Trustees, as
trustees but not individually or personally, acting from time to time under a
Certificate of Trust filed December 21, 1995,at the office of the Secretary of
State of the State of Delaware which is hereby referred to and is also on file
at the principal office of the Trust. The obligations of The Victory Portfolios
entered into in the name or on behalf thereof by any of the Trustees,
representatives or agents are made not individually, but in such capacities, and
are not binding upon any of the Trustees, shareholders or representatives of the
Trust personally, but bind only the Trust property, and all persons dealing with
any class of shares of the Trust must look solely to the Trust property
belonging to such class for the enforcement of any claims against the Trust.
9
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the day and year first
above written.
THE VICTORY PORTFOLIOS
By:/s/J. David Huber
-----------------
Vice President
Attest:/s/Scott A. Englehart
---------------------
Secretary
BISYS FUND SERVICES LIMITED
PARTNERSHIP, d/b/a
BISYS FUND SERVICES
By:/s/J. David Huber
-----------------
Executive Vice President
Attest:/s/George O. Martinez
---------------------
Senior Vice President
10
<PAGE>
SCHEDULE I
As Amended as of June 1, 1996
Name of Fund Class
- ------------ -----
1. The Victory Balanced Fund A/B
2. The Victory Diversified Stock Fund A/B
3. The Victory Government Mortgage Fund A
4. The Victory Growth Fund A
5. The Victory Intermediate Income Fund A
6. The Victory International Growth Fund A/B
7. The Victory Investment Quality Bond Fund A
8. The Victory Limited Term Income Fund A
9. The Victory Ohio Municipal Bond Fund A
10. The Victory Ohio Regional Stock Fund A/B
11. The Victory Prime Obligations Fund A
12. The Victory Special Growth Fund A
13. The Victory Special Value Fund A/B
14. The Victory Stock Index Fund A
15. The Victory Tax-Free Money Market Fund A
16. The Victory U.S. Government Obligations Fund Investor/Select
17. The Victory Value Fund A
18. The Victory Financial Reserves Fund A
19. The Victory Fund for Income A
20. The Victory Government Bond Fund A/B
21. The Victory Institutional Money Market Fund Investor/Select
22. The Victory National Municipal Bond Fund A/B
23. The Victory New York Tax-Free Fund A/B
24. The Victory Ohio Municipal Money Market Fund A
11
<PAGE>
SCHEDULE I
As Amended as of March 1, 1997
Name of Fund Class
- ------------ -----
1. The Victory Balanced Fund A/B
2. The Victory Diversified Stock Fund A/B
3. The Victory Government Mortgage Fund A
4. The Victory Growth Fund A
5. The Victory Intermediate Income Fund A
6. The Victory International Growth Fund A/B
7. The Victory Investment Quality Bond Fund A
8. The Victory Limited Term Income Fund A
9. The Victory Ohio Municipal Bond Fund A
10. The Victory Ohio Regional Stock Fund A/B
11. The Victory Prime Obligations Fund A
12. The Victory Special Growth Fund A
13. The Victory Special Value Fund A/B
14. The Victory Stock Index Fund A
15. The Victory Tax-Free Money Market Fund A
16. The Victory U.S. Government Obligations Fund Investor/Select
17. The Victory Value Fund A
18. The Victory Financial Reserves Fund A
19. The Victory Fund for Income A
20. The Victory Government Bond Fund A/B
21. The Victory Institutional Money Market Fund Investor/Select
22. The Victory National Municipal Bond Fund A/B
23. The Victory New York Tax-Free Fund A/B
24. The Victory Ohio Municipal Money Market Fund A
25. The Victory Lakefront Fund A
26. The Victory Real Estate Investment Fund A
12
<PAGE>
SCHEDULE I
Amended as of March 2, 1998
- --------------------------------------------------------------------------------
1. Victory Balanced Fund 26. Victory Federal Money Market Fund
Class A Shares Investor Shares
Class B Shares Select Shares
Key Shares 27. Victory Convertible Securities Fund
2. Victory Diversified Stock Fund 28. Victory LifeChoice Conservative
Class A Shares Investor Fund
Class B Shares 29. Victory LifeChoice Growth
3. Victory Government Mortgage Fund Investor Fund
4. Victory Growth Fund 30. Victory LifeChoice Moderate
5. Victory Financial Reserves Fund Investor Fund
6. Victory Fund for Income
7. Victory Institutional Money Market Fund
Investor Shares
Select Shares
8. Victory Intermediate Income Fund
9. Victory International Growth Fund
Class A Shares
Class B Shares
10. Victory Investment Quality Bond Fund
11. Victory Lakefront Fund
12. Victory Limited Term Income Fund
13. Victory National Municipal Bond Fund
Class A Shares
Class B Shares
14. Victory New York Tax-Free Fund
Class A Shares
Class B Shares
15. Victory Ohio Municipal Bond Fund
16. Victory Ohio Municipal Money Market Fund
17. Victory Ohio Regional Stock Fund
Class A Shares
Class B Shares
18. Victory Prime Obligations Fund
19. Victory Real Estate Investment Fund
20. Victory Special Growth Fund
21. Victory Special Value Fund
Class A Shares
Class B Shares
22. Victory Stock Index Fund
23. Victory Tax-Free Money Market Fund
24. Victory U.S. Government Obligations Fund
Investor Shares
Select Shares
25.Victory Value Fund
- --------------------------------------------------------------------------------
<PAGE>
SCHEDULE I
Amended as of May 29, 1998
<TABLE>
<S> <C>
1. Victory Balanced Fund 26.Victory Federal Money Market Fund
Class A Shares Investor Shares
Class B Shares Select Shares
2. Victory Diversified Stock Fund 27.Victory Convertible Securities Fund
Class A Shares 28.Victory LifeChoice Conservative Investor Fund
Class B Shares 29.Victory LifeChoice Growth Investor Fund
3. Victory Government Mortgage Fund 30.Victory LifeChoice Moderate Investor Fund
4. Victory Growth Fund 31.Victory Maine Municipal Bond Fund
5. Victory Financial Reserves Fund (Intermediate)
6. Victory Fund for Income 32.Victory Maine Municipal Bond Fund
7. Victory Institutional Money Market Fund (Short-Intermediate)
Investor Shares 33.Victory Michigan Municipal Bond Fund
Select Shares 34.Victory Equity Income Fund
8. Victory Intermediate Income Fund 35.Victory National Municipal Bond Fund (Long)
9. Victory International Growth Fund 36.Victory National Municipal Bond Fund
Class A Shares (Short-Intermediate)
Class B Shares
10.Victory Investment Quality Bond Fund
11.Victory Lakefront Fund
12.Victory Limited Term Income Fund
13.Victory National Municipal Bond Fund
Class A Shares
Class B Shares
14.Victory New York Tax-Free Fund
Class A Shares
Class B Shares
15.Victory Ohio Municipal Bond Fund
16.Victory Ohio Municipal Money Market Fund
17.Victory Ohio Regional Stock Fund
Class A Shares
Class B Shares
18.Victory Prime Obligations Fund
19.Victory Real Estate Investment Fund
20.Victory Special Growth Fund
21.Victory Special Value Fund
Class A Shares
Class B Shares
22.Victory Stock Index Fund
23.Victory Tax-Free Money Market Fund
24.Victory U.S. Government Obligations Fund
Investor Shares
Select Shares
25.Victory Value Fund
</TABLE>
AMENDED AND RESTATED
MUTUAL FUND CUSTODY AGREEMENT
THIS AGREEMENT is made as of August 1, 1996, by and between
The Victory Portfolios, a Delaware business trust (the "Trust"), which may issue
one or series of shares of beneficial interest (each a "Fund"), and Key Trust
Company of Ohio, N.A., a bank chartered under the laws of the United States,
having its principal office at 127 Public Square, Cleveland, Ohio 44114-1306
(the "Custodian").
W I T N E S S E T H:
WHEREAS, the Trust is registered as an open-end, management
investment company under the Investment Company Act of 1940, as amended (the
1940 Act"); and
WHEREAS, the Trust desires to retain the Custodian to serve as
the Trust's custodian and the Custodian is willing to furnish such services;
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, it is agreed between the parties hereto as follows:
1. Appointment. The Trust, on behalf of each Fund, separately
and not jointly, hereby appoints the Custodian to act as custodian of the
securities, cash and other property of each Fund listed on Attachment A hereto,
as it may be amended from time to time, on the terms set forth in this
Agreement. The Custodian accepts such appointment and agrees to furnish the
services herein set forth in return for the compensation as provided in
Paragraph 27 of this Agreement.
2. Delivery of Documents. The Trust has furnished The
Custodian with copies properly certified or authenticated of each of the
following:
<PAGE>
(a) Resolutions of the Trust's Board of Trustees authorizing
the appointment of the Custodian as custodian of the securities, cash and other
property of each Fund of the Trust and approving this Agreement;
(b) Incumbency and signature certificates identifying and
containing the signatures of the Trust's officers and/or the persons authorized
to sign Proper Instructions, as hereinafter defined, on behalf of the Trust;
(c) The Trust's Certificate of Trust filed with the Secretary
of State of the State of Delaware and the Trust's Trust Instrument is filed with
the Secretary of the Trust (such Certificate of Trust and Trust Instrument, as
currently in effect and as they shall from time to time be amended, are herein
together called the "Certificate");
(d) The Trust's By-Laws and all amendments thereto (such
By-Laws, as currently in effect and as they shall from time to time be amended,
are herein called the "ByLaws");
(e) Resolutions of the Trust's Board of Trustees and/or the
Trust's shareholders approving the Investment Advisory Agreements between the
Trust on behalf of various Funds and Key Mutual Fund Advisers, Inc. dated as of
January 1, 1996
(f) The Administration Agreement between The Trust and BISYS
Fund Services Limited Partnership dated as of June 1, 1996;
(g) The Distribution Agreement between the Trust and BISYS
Fund Services Limited Partnership dated as of June 1, 1996;
- 2 -
<PAGE>
(h) The Trust's current Registration Statement on Form N-1A
under the 1940 Act and the Securities Act of 1933, as amended ("the 1933 Act")
as filed with the Securities and Exchange Commission ("SEC"); and
(i) The Trust's most recent prospectuses including all
amendments and supplements thereto (the "Prospectus").
The Trust will furnish the Custodian from time to time with
copies of all amendments of or supplements to the foregoing, if any. The Trust
will also furnish the Custodian with a copy of the opinion of counsel for the
Trust with respect to the validity of the statements issued by the Trust
("Shares") and the status of such Shares under the Act of 1933 filed with the
SEC, and any other applicable federal law or regulation.
3. Definitions.
(a) "Authorized Person". As used in this Agreement, the term
"Authorized Person" means the Trust's President, Vice-President, Treasurer and
any other person, whether or not any such person is an officer or employee of
the Trust, duly authorized by Trustees of the Trust to give Proper Instructions
on behalf of the Trust and the Funds listed on Attachment A which may be amended
from time to time.
(b) "Book-Entry System". As used in this Agreement, the term
"Book- Entry System" means the Federal Reserve/Treasury book-entry system for
United States and federal agency securities, its successor or successors and its
nominee or nominees.
(c) "Investment Adviser" means each investment adviser of
Funds of the Trust.
(d) "Property". The term "Property", as used in this
Agreement, means:
- 3 -
<PAGE>
(i) any and all securities, cash, and other property of
the Trust which the Trust may from time to time deposit, or cause to be
deposited, with the Custodian or which the Custodian may from time to
time hold for the Trust;
(ii) all income, dividends, or distributions of any kind
in respect of any other such securities or other property;
(iii) all proceeds of the sales, repurchase, redemptions
(or otherwise)of any of such securities or other property; and
(iv) all proceeds of the sale of securities issued by
the Trust, which are received by the Custodian from time to time from
or on behalf of the Trust.
(e) "Securities Depository". As used in this Agreement, the
term "Securities Depository" shall mean The Depository Trust Company ("DTC"), a
clearing agency registered with the SEC or its successor or successors and its
nominee or nominees; and shall also mean any other registered clearing agency,
its successor or successors specifically identified in a certified copy of a
resolution of the Trust's Board of Trustees delivered to the Custodian and
specifically approving deposits by the Custodian therein.
(f) "Proper Instructions". Means instructions
(i) delivered by mail; telegram,;, cable; telex;
facsimile sending device; DTC "ID" or "IID" system or any similar
system; and any Trade Order Entry System acceptable to the parties; and
received by the Mutual Funds Custody Division of the Custodian, signed
by two Authorized Persons or by persons reasonably believed by the
Custodian to be Authorized Persons; or
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(ii) transmitted electronically through the Custodian
Asset Management System or any similar electronic instruction system
acceptable to the Custodian; or
(iii) previously agreed to in writing by the Trust and
the Custodian or provided orally by the Trust in form satisfactory to
the Custodian and promptly followed by written instructions signed by
an Authorized Person.
4. Warranties and Representations.
(a) The Trust warrants and represents that:
(i) It is a business trust organized under the laws of
the Commonwealth of Massachusetts;
(ii) It is registered as an investment company under the
Investment Company Act of 1940, as amended; and
(iii) It is duly authorized to enter into this Agreement
and the Agreement is a valid and binding obligation of the Trust.
(b) the Custodian warrants and represents that:
(i) It is a national bank duly organized under the laws
of the United States;
(ii) It is duly authorized to enter into this Agreement
and the Agreement is a valid and binding obligation of the Bank; and
(iii) It is under no regulatory restriction that would
materially affect its ability to carry out its obligations under this
Agreement.
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5. Delivery and Registration of the Property. (a) The Trust
will deliver or cause to be delivered to the Custodian all Property owned by it,
at any time during the period of this Agreement, except for securities and
monies to be delivered to any Subcustodian appointed pursuant to Paragraph 11
hereof. The Custodian will not be responsible for such securities and such
monies until actually received by it. All securities delivered to the Custodian
or to any such subcustodian (other than in bearer form) shall be registered in
the name of the Trust or in the name of a nominee of the Trust or in the name of
the Custodian or any nominee of the Custodian (with or without indication of
fiduciary status) or in the name of any subcustodian or any nominee of such
subcustodian appointed pursuant to Paragraph 11 hereof or shall be properly
endorsed and in form for transfer satisfactory to the Custodian.
(b) The Custodian shall at all times hold securities of the
Trust either: (i) by physical possession of the share certificates or other
instruments representing such securities in registered or bearer form; or (ii)
in the Book-Entry System, or (iii) in a Securities Depository or (iv) a
Sub-Custodian (as herein defined) of the Custodian.
(c) The Custodian shall at all times hold securities of the
Trust in the name of the Custodian, the Trust or any nominee of either of them,
unless otherwise directed by Proper Instructions; provided that, in any event,
all securities and other assets of the Trust shall be held in an account of the
Custodian containing only the securities and assets of the Trust, or only
securities and assets held by the Custodian as a fiduciary or custodian for
customers, and provided further, that the records of the Custodian shall
indicate at all times
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the Trust or other customer for which such securities and other assets are held
in such account and the respective interests therein.
6. Voting Rights. It is the Custodian's responsibility to
deliver to the Trust or the Investment Adviser of the relevant Fund, via
overnight mail if necessary, all forms of proxies, all notices of meetings, and
any other notices or announcements materially affecting or relating to
securities owned by the Trust that are received by the Custodian, any
Subcustodian (as hereinafter defined), or any nominee of either of them, and
upon receipt of Proper Instructions, the Custodian shall execute and deliver, or
use its best efforts to cause such Subcustodian or nominee to execute and
deliver, such proxies or other authorizations as may be required. Where
warrants, options, tenders or other securities have fixed expiration dates, the
Trust understands that in order for the Custodian to act, the Custodian must
receive the instructions of the Trust or the Investment Adviser at its offices
in Cleveland, addressed as the Custodian may from time to time request, by no
later than noon (Eastern time) at least one business day prior to the last
scheduled date to act with respect thereto (or such earlier date or time as the
Custodian may reasonably notify the Trust). Absent the Custodian's timely
receipt of such instructions, such instruments will expire without liability to
the Custodian.
7. Exercise of Rights; Tender Offers. Upon receipt of Proper
Instructions, the Custodian shall: (a) deliver warrants, puts, calls, rights or
similar securities to the issuer or trustee thereof, or to the agent of such
issuer or trustee, for the purpose of exercise or sale; and (b) deposit
securities upon invitations for tenders thereof, provided that the consideration
for such securities is to be paid or delivered to the Custodian, or the tendered
securities
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included in the Proper Instructions that are received in exchange for the
tendered securities are to be returned to the Custodian. Notwithstanding any
provision of this Agreement to the contrary, the Custodian shall take all action
as directed in Proper Instructions to comply with the terms of all mandatory or
compulsory exchanges, calls, tenders, redemptions, or similar rights of security
ownership, and shall promptly notify the Trust or the Investment Adviser of such
action in writing by facsimile transmission or in such manner as the Trust may
designate in writing.
8. Options. Upon receipt of Proper Instructions, the Custodian
shall: (a) receive and retain confirmations or other documents, if any,
evidencing the purchase or writing of an option on a security or securities
index by the Trust; (b) deposit and maintain in a segregated account, securities
(either physically or by book entry in a Securities Depository), cash or other
assets; and/or (c) pay, release and/or transfer such securities, cash, or other
assets in accordance with notices or other communications evidencing the
expiration, termination or exercise of such options furnished by the Options
Clearing Corporation, the securities or options exchange on which such options
are traded or such other organization as may be responsible for handling such
option transactions. The Trust and the broker-dealer shall be responsible for
the sufficiency of assets held in any segregated account established in
compliance with applicable margin maintenance requirements and the performance
of other terms of any option contract, and shall promptly upon notice from the
Custodian bring such accounts into compliance with such terms or requirements.
9. Futures Contracts. Upon receipt of Proper Instructions, the
Custodian shall: (a) receive and retain confirmation, if any, evidencing the
purchase or sale of a futures
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contract or an option on a futures contract by a Fund; (b) deposit and maintain
in a segregated account, cash, securities and other assets designated as
initial, maintenance or variation "margin" deposits intended to secure the
Trust's performance of its obligations under any futures contracts purchased or
sold or any options on futures contracts written by the Trust, regarding such
margin deposits; and (c) release assets from and/or transfer assets into such
margin accounts only in accordance with any such Proper Instructions. The Trust
shall be responsible for the sufficiency of assets held in the segregated
account in compliance with applicable margin maintenance requirements and the
performance of any futures contract or option on a futures contract in
accordance with its terms, and shall promptly upon notice act to bring such
accounts into compliance with such terms or requirements.
10. Receipt and Disbursement of Money.
(a) The Custodian shall open and maintain a custody
account for the Trust, and shall hold in such account, subject to the provisions
hereof, all cash received by it from or for the Trust. The Custodian shall make
payments of cash to, or for the account of, the Trust from such cash only (i)
for the purchase of securities for the Trust as provided in paragraph 16 hereof;
(ii) upon receipt of Proper Instructions, for the payment of dividends or for
the payment of interest, taxes, administration, distribution or advisory fees or
expenses which are to be borne by the Trust under the terms of this Agreement,
any advisory agreement, any distribution agreement, or any administration
agreement; (iii) upon receipt of Proper Instructions for payments in connection
with the conversion, exchange or surrender of securities owned or subscribed to
by the Trust and held by or to be delivered to the
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Custodian; (iv) to a subcustodian pursuant to Paragraph 11 hereof; or (v) upon
receipt of Proper Instructions for other corporate purposes.
(b) The Custodian is hereby authorized to endorse and collect
all checks, drafts or other orders for the payment of money received as
custodian for the Trust.
11. Receipt of Securities.
(a) Except as provided by Paragraph 12 hereof, the Custodian
shall hold all securities and non-cash Property received by it for the Trust.
All such securities and non-cash Property are to be held or disposed of by the
Custodian for the Trust pursuant to the terms of this Agreement. In the absence
of Proper Instructions, the Custodian shall have no power or authority to
withdraw, deliver, assign, hypothecate, pledge or otherwise dispose of any such
securities and non-cash Property, except in accordance with the express terms
provided for in this Agreement. In no case may any trustee, officer, employee or
agent of the Trust, acting as individuals, withdraw any securities or non-cash
Property.
12. Subcustodian Agreements. In connection with its duties
under this Agreement, the Custodian may, at its own expense, enter into
subcustodian agreements with other banks or trust companies for the receipt of
certain securities and cash to be held by the Custodian for the account of the
Trust pursuant to this Agreement; provided that each such bank or trust company
has an aggregate capital, surplus and undivided profits, as shown by its last
published report, of not less then twenty million dollars ($20,000,000) and that
such bank or trust company agrees with the Custodian to comply with all relevant
provisions of the 1940 Act and applicable rules and regulations thereunder. The
Custodian will be liable for acts or omissions of any such subcustodian.
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(a) Promptly after the close of business on each day the
Custodian shall furnish the Trust with system access to review a summary of all
transfers to or from the account of the Trust during said day. Where securities
are transferred to the account of the Trust established at a Securities
Depository or the Book Entry System pursuant to Paragraph 13 hereof, the
Custodian shall use the Securities Depository or Book Entry System to identity
as belonging to such Trust the securities in a commingled group of securities
registered in the name of the Custodian (or its nominee) or shown in the
Custodian's account on the books of a Securities Depository or the Book-Entry
System. At least monthly and from time to time, the Custodian shall furnish the
Trust with a detailed statement of the Property held for the Trust under this
Agreement.
(b) Notwithstanding any other provision of this agreement, no
provision of this Section 12, and no provision of this agreement relating to
subcustodians, shall apply to any agreement entered into by the Custodian for
the purpose of facilitating repurchase transactions by the Fund ("Tri-party
Agreements"), except that (i) the indemnification obligations owed to the
Custodian by the Fund and set forth in Sections 28(a) and (b) shall apply to
such Tri-party Agreements without qualification; and (ii) the Fund's rights
contained in Section 30 of this Agreement shall apply to such Tri-party
Agreements. All actions taken by the Custodian in connection with such Tri-party
Agreements shall be taken solely for the purpose of providing and accepting
instructions at the Fund's request and on the Fund's behalf.
13. Use of Securities Depository or the Book-Entry System. The
Trust shall deliver to the Custodian a certified resolution of the Board of
Trustees of the Trust
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approving, authorizing and instructing the Custodian on a continuous and ongoing
basis until instructed to the contrary by Proper Instructions actually received
by the Custodian (i) to deposit in a Securities Depository or the Book-Entry
System all securities of the Trust eligible for deposit therein and (ii) to
utilize a Securities Depository or the Book-Entry System to the extent possible
in connection with the performance of its duties hereunder, including without
limitation settlements of purchases and sales of securities by the Trust, and
deliveries and returns of securities collateral in connection with borrowings.
Without limiting the generality of such use, it is agreed that the following
provisions shall apply thereto:
(a) Securities and any cash of the Trust deposited in a
Securities Depository or the Book-Entry System will at all times be segregated
from any assets and cash controlled by the Custodian in other than a fiduciary
or custodial capacity but may be commingled with other assets held in such
capacities. The Custodian will effect payment for securities, in the place where
the transaction is settled, unless the Trust has given the Custodian Proper
Instructions to the contrary.
(b) All Books and records maintained by the Custodian which
relate to the Trust participation in a Securities Depository or the Book-Entry
System will at all times during the Custodian's regular business hours be open
to the inspection of the Trust's duly authorized employees or agents, and the
Trust will be furnished with all information in respect of the services rendered
to it as it may require.
14. Instructions Consistent With The Certificate, etc. The
Custodian shall act only upon Proper Instructions. The Custodian may assume that
any Proper Instructions received hereunder are not in any way inconsistent with
any provision of
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the Certificate or By-Laws of the Trust or any vote or resolution of the Trust's
Board of Trustees, or any committee thereof. The Custodian shall be entitled to
rely upon any Proper Instructions actually received by the Custodian pursuant to
this Agreement. The Trust agrees that the Custodian shall incur no liability in
acting upon Proper Instructions given to the Custodian. In accordance with
instructions from the Trust, advances of cash or other Property made by the
Custodian, arising from the purchase, sale, redemption, transfer or other
disposition of Property of the Trust, or in connection with the disbursement of
trusts to any party, or in payment of fees, expenses, claims or liabilities owed
to the Custodian by the Trust, or to any other party which has secured judgment
in a court of law against the Trust which creates an overdraft in the accounts
or over-delivery of Property shall be deemed a loan by the Custodian to the
Trust, to the extent permitted under applicable law. Such loans shall be payable
on demand, bearing interest at such rate customarily charged by the Custodian
for similar loans or such other rate agreed to by the parties. The Trust agrees
that test arrangements, authentication methods or other security devices to be
used with respect to instructions which the Trust may give by telephone, telex,
TWX, facsimile transmission, bank wire or through an electronic instruction
system, shall be processed in accordance with terms and conditions for the use
of such arrangements, methods or devices as the Custodian may put into effect
and modify from time to time. The Trust shall safeguard any test keys,
identification codes or other security devices which the Custodian makes
available to the Trust and agrees that the Trust shall be responsible for any
loss, liability or damage incurred by the Custodian or by the Trust as a result
of the Custodian's acting in accordance with instructions from any unauthorized
person using the proper security device unless such loss, liability or
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damage was incurred as a result of the Custodian's negligence or willful
misconduct. The Custodian may electronically record, but shall not be obligated
to so record, any instructions given by telephone and any other telephone
discussions with respect to the Account. In the event that the Trust uses the
Custodian's Asset Management System, the Trust agrees that the Custodian is not
responsible for the consequences of the failure of that system to perform for
any reason, beyond the reasonable control of the Custodian, or the failure of
any communications carrier, utility, or communications network. In the event
that system is inoperable, the Trust agrees that it will accept the
communication of transaction instructions by telephone, facsimile transmission
on equipment compatible to the Custodian's facsimile receiving equipment or by
letter, at no additional charge to the Trust.
15. Transactions Not Requiring Instructions. The Custodian is
authorized to take the following action without Proper Instructions:
(a) Collection of Income and Other Payments. The Custodian
shall:
(i) collect and receive for the account of the Trust,
all income and other payments and distributions, including
(without limitation) stock dividends, rights, warrants and
similar items, included or to be included in the Property of
the Trust, and promptly advise the Trust of such receipt and
shall credit such income, as collected, to the Trust. From
time to time, the Custodian may elect to credit, but shall not
be so obligated, the account with interest, dividends or
principal payments on payable or contractual settlement date,
in anticipation of receiving same from a payor, central
depository, broker or other agent employed by the Trust or the
Custodian. Any such crediting and posting shall be at the
Trust's sole risk, and the Custodian shall be
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authorized to reverse any such advance posting after making
every reasonable attempt to collect, in the event it does not
receive good funds from any such payor, central depository,
broker or agent of the Customer.
(ii) with respect to securities of foreign issue,
effect collection of dividends, interest and other income, and
to notify the Trust of any call for redemption, offer of
exchange, right of subscription, reorganization, or other
proceedings materially affecting such securities, or any
default in payments due thereon. It is understood, however,
that the Custodian shall be under no responsibility for any
failure or dealing in effecting such collections or giving
such notice with respect to securities of foreign issue,
regardless of whether or not the relevant information is
published in any financial service available to it unless such
failure or delay is due to its negligence or willful
misconduct; however, this sub-paragraph (ii) shall not be
construed as creating any such responsibility with respect to
securities of non-foreign issue. Collections of income in
foreign currency are, to the extent possible, to be converted
into United States dollars unless otherwise instructed by
Proper Instructions, and in effecting such conversion the
Custodian may use such methods or agencies as it may see fit.
All risk and expenses incident to such collection and
conversion is for the account of the Trust and the Custodian
shall have no responsibility for fluctuations in exchange
rates affecting any such conversion.
(iii) endorse and deposit for collection in the name
of the Trust, checks, drafts, or other orders for the payment
of money on the same day as received;
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(iv) receive and hold for the account of the Trust
all securities received by the Trust as a result of a stock
dividend, share split-up or reorganization, recapitalization,
readjustment or other rearrangement or distribution of rights
or similar securities issued with respect to any portfolio
securities of the Trust held by the Custodian hereunder;
(v) present for payment and collect the amount
payable upon all securities which may mature or be called,
redeemed or retired, or otherwise become payable on the date
such securities become payable;
(vi) take any action which in the opinion of the
Custodian may be necessary and proper in connection with the
collection and receipt of such income and other payments and
the endorsements for collection of checks, drafts and other
negotiable instruments;
(vii) with respect to domestic securities, to
exchange securities in temporary form for securities in
definitive form, to effect an exchange of the shares where the
par value of stock is changed, and to surrender securities at
maturity or when advised of earlier call for redemption,
against payment therefor in accordance with accepted industry
practice. The Trust understands that the Custodian subscribes
to one or more nationally recognized services that provide
information with respect to calls for redemption of bonds or
other corporate actions. The Custodian shall not be liable for
failure to redeem any called bond or take other action if
notice of such call or action was not provided by any service
to which it subscribes provided that the Custodian shall have
acted in good faith without negligence or willful misconduct.
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The Custodian shall have no duty to notify the Trust of any
rights, duties, limitations, conditions or other information
set forth in any security (including mandatory or optional
put, call and similar provisions), but the Custodian shall
forward to the Trust or the appropriate Investment Adviser any
notices or other documents subsequently received in regard to
any such security. When fractional shares of stock of a
declaring corporation are received as a stock distribution,
unless specifically instructed to the contrary in writing, the
Custodian is authorized to sell the fraction received and
credit the Trust's account. Unless specifically instructed to
the contrary in writing, the Custodian is authorized to
exchange securities in bearer form for securities in
registered form. If any Property registered in the name of a
nominee of the Custodian is called for partial redemption by
the issue of such Property, the Custodian is authorized to
allot the called portion to the respective beneficial holders
of the Property in such manner deemed to be fair and equitable
by the Custodian in its sole discretion.
(b) Deposits of Proceeds of Issuance of Shares. The Custodian
shall collect and receive for the account of the Fund all payments received in
payment for shares of such Fund issued by the Trust.
(c) Redemptions. Upon receipt of notice by the Fund's transfer
agent stating that such transfer agent is required to redeem shares and
specifying the number and class of shares which such transfer agent is required
to redeem and the date and time the request or requests for redemption were
received by the Fund's distributor, the Custodian shall either (i) pay to such
transfer agent, for distribution to the redeeming shareholder, the amount
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payable to such shareholder upon the redemption of such shares as determined in
the manner described in the then current Prospectus, or (ii) arrange for the
direct payment of such redemption proceeds by the Custodian to the redeeming
shareholder in accordance with such procedures and controls as are mutually
agreed upon from time to time by and among the Custodian, the Trust and the
Trust's transfer agent.
(d) Miscellaneous Transactions. The Custodian is authorized to
deliver or cause to be delivered Property against payment or other consideration
or written receipt therefor in the following cases:
(i) for examination by a broker selling for the
account of the Trust;
(ii) for the exchange of interim receipts or
temporary securities for definitive securities;
(iii) for transfer of securities into the name of the
Trust or the Custodian or a nominee of either, or for exchange
of securities for a different number of bonds, certificates,
or other evidence, representing the same aggregate face amount
or number of units bearing the same interest rate, maturity
date and call provisions, if any; provided that, in any such
case, the new securities are to be delivered to the Custodian.
16. Transactions Requiring Instructions. Upon receipt of
Proper Instructions and not otherwise, the Custodian, directly or through the
use of a Securities Depository or the Book-Entry System, shall:
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(a) Execute and deliver to such persons as may be designated
in such Proper Instructions, proxies, consents, authorizations, and any other
instruments whereby the authority of the Trust as owner of any securities may be
exercised;
(b) Deliver any securities held for the Trust against receipt
of other securities or cash issued or paid in connection with the liquidation,
reorganization, refinancing, merger, consolidation or recapitalization of any
corporation, or the exercise of any conversion privilege;
(c) Deliver any securities held for the Trust to any
protective committee, reorganization committee or other person in connection
with the reorganization, refinancing, merger, consolidation, recapitalization or
sale of assets of any corporation, against receipt of such certificates or
deposit, interim receipts or other instruments or documents as may be issued to
it to evidence such delivery;
(d) Make such transfers or exchanges of the assets of the
Trust and take such other steps as shall be stated in said instructions to be
for the purpose of effectuating any duly authorized plan of liquidation,
reorganization, merger, consolidation or recapitalization of the Trust;
(e) Release securities belonging to the Trust to any bank or
trust company for the purpose of pledge or hypothecation to secure any loan
incurred by the Trust; and pay such loan upon redelivery to it of the securities
pledged or hypothecated therefore and upon surrender of the note or notes
evidencing the loan;
(f) Deliver any securities held for the Trust upon the
exercise of a covered call option written by the Trust on such securities; and
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(g) Deliver securities held for the Trust pursuant to separate
security lending agreements.
(h) Regarding dividends and distributions, the Trust shall
furnish the Custodian with appropriate evidence of action by the Trust's Board
of Trustees declaring and authorizing the payment of any dividends and
distributions to the shareholders of the particular Fund. Upon receipt by the
Custodian of Proper Instructions with respect to dividends and distributions
declared by the Trust's Board of Trustees and payable to the shareholders of the
Fund who have elected in the proper manner to receive their distributions and/or
dividends in cash, and in conformance with procedures mutually agreed upon by
the Custodian, the Trust, and the Trust's transfer agent, the Custodian shall
pay to the Trust's transfer agent, as agent for the shareholders, an amount
equal to the amount indicated in said Proper Instructions as payable by the
Trust to such shareholders for distribution in cash by the transfer agent to
such shareholders. In lieu of paying the Trust's transfer agent cash dividends
and distributions, the Custodian may arrange for the direct payment of cash
dividends and distributions to shareholders by the Custodian in accordance with
such procedures and controls as are mutually agreed upon from time to time by
and among the Trust, the Custodian and the Trust's transfer agent.
17. Purchase of Securities. Promptly after each purchase of
securities, the Trust or the appropriate Investment Adviser shall deliver to the
Custodian (as Custodian) Proper Instructions specifying with respect to each
such purchase: (a) the name of the issuer and the title of the securities, (b)
the number of shares of the principal amount purchased and accrued interest, if
any, (c) the dates of purchase and settlement, (d) the purchase price per
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unit, (e) the total amount payable upon such purchase, (f) the name of the
person from whom or the broker through whom the purchase was made and (g) the
Fund for which the purchase was made. The Custodian shall upon receipt of
securities purchased by or for the Trust pay out of the moneys held for the
account of such Trust the total amount payable to the person from whom or the
broker through whom the purchase was made, if and only if the same conforms to
the total amount payable as set forth in such Proper Instructions.
18. Sales of Securities. Promptly after each sale of
securities, the Trust or the appropriate Investment Adviser shall deliver to the
Custodian Proper Instructions, specifying with respect to each such sale: (a)
the name of the issuer and the title of the security, (b) the number of shares
or principal amount sold, and accrued interest, if any, (c) the date of sale,
(d) the sale price per unit, (e) the total amount payable to the Trust upon such
sale, (f) the name of the broker through whom or the person to whom the sale was
made and (g) the Fund for which the sale was made. The Custodian shall deliver
the securities upon receipt of the total amount payable to the Trust upon such
sale, if and only if the same conforms to the total amount payable as set forth
in such Proper Instructions.
19. Records. The books and records pertaining to the Trust
which are in the possession of the Custodian shall be the property of the Trust.
Such books and records shall be prepared and maintained as required by the 1940
Act, as amended; other applicable federal and state securities laws and rules
and regulations; and, any state or federal regulatory body having appropriate
jurisdiction. The Trust, or the Trust's authorized representative, shall have
access to such books and records at all times during the Custodian's normal
business hours, and such books and records shall be surrendered to the Trust
promptly upon request.
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Upon reasonable request of the Trust, copies of any such books and records shall
be provided by the Custodian to the Trust or the Trust's authorized
representative.
20. Reports. The Custodian shall furnish the Trust the
following reports:
(a) such periodic and special reports as the Trustees may
reasonably request;
(b) a monthly statement summarizing all transactions and
entries for the account of each Fund;
(c) a monthly report of Fund securities belonging to each Fund
showing the adjusted amortized cost of the issues and the market value at the
end of the month;
(d) a monthly report of the cash account of each Fund showing
disbursements; and
(e) such other information as may be agreed upon from time to
time between the Trustees and the Custodian.
21. Compliance with Rule 17f-2. The Custodian shall comply
with the requirements of Rule 17f-2 under the 1940 Act and will permit access to
the Fund's securities only in compliance with the requirements of Rule 17f-2.
22. Cooperation with Accountants. The Custodian shall
cooperate with the Trust's independent certified public accountants and shall
take all reasonable action in the performance of its obligations under this
Agreement to assure that the necessary information is made available to such
accountants for the expression of their unqualified opinion, including but not
limited to the opinion included in the Trust's semiannual report on the Trust's
Form N-SAR.
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23. Confidentiality. The Custodian agrees on behalf of itself
and its employees to treat confidentially and as the proprietary information of
the Trust all records and other information relative to the Trust and its prior,
present or potential Shareholders and relative to the advisors and its prior,
present or potential customers, and not to use such records and information for
any purpose other than performance of its responsibilities and duties hereunder,
except after prior notification to and approval in writing by the Trust, which
approval shall not be unreasonably withheld and may not be withheld where the
Custodian may be exposed to civil or criminal contempt proceedings for failure
to comply, when requested to divulge such information by duly constituted
authorities, or when so requested by the Trust. Nothing contained herein,
however, shall prohibit the Custodian from advertising or soliciting the public
generally with respect to other products or services, regardless of whether such
advertisement or solicitation may include prior, present or potential
Shareholders of the Trust provided that, in no event, will any information
obtained as custodian be used in any such solicitation or advertisement.
24. Equipment Failures. In the event of the failure of certain
equipment including but not limited to data processing equipment,
telecommunications equipment, or power generators located at the Custodian, at a
designated Subcustodian or nominee, or at a third party contracted to for
certain securities processing services, the Custodian shall, at no additional
expense to the Trust, take reasonable steps to minimize service interruptions
but shall not have liability with respect thereto. The Custodian shall enter
into and shall maintain in effect with appropriate parties one or more
agreements making reasonable provision for
- 23 -
<PAGE>
backup emergency use of electronic data processing equipment to the extent
appropriate equipment is available.
25. Right to Receive Advice.
(a) Advice of Trust. If the Custodian shall be in doubt as to
any action to be taken or omitted by it, it may request, and shall promptly
receive, clarification or advice from the Trust.
(b) Advice of Counsel. If the Custodian shall be in doubt as
to any question of law involved in any action to be taken or omitted by the
Custodian, it may request advice at its own cost from counsel of its own
choosing (who may be counsel for the Trust or the Custodian, at the option of
the Custodian).
(c) Conflicting Advice. In case of conflict between directions
or advice received by the Custodian pursuant to subparagraph (a) of this
paragraph and advice received by the Custodian pursuant to subparagraph (b) of
this paragraph, the Custodian shall be entitled to rely on and follow the advice
received pursuant to the latter provision alone.
(d) Protection of the Custodian. The Custodian shall be
protected in any action or inaction which it takes or omits to take in reliance
on any directions or advice received pursuant to subparagraph (a) of this
section. However, nothing in this paragraph shall be construed as imposing upon
the Custodian any obligation (i) to seek such directions or advice, or (ii) to
act in accordance with such directions or advice when received. Nothing in this
subparagraph shall excuse the Custodian when an action or omission on the part
of the Custodian constitutes willful misfeasance or negligence by the Custodian
of its duties under this Agreement.
- 24 -
<PAGE>
26. Compliance with Governmental Rules and Regulations. The
Trust assumes full responsibility for insuring that the contents of each
Prospectus of the Trust complies with all applicable requirements of the 1933
Act, the 1940 Act, and any laws, rules and regulations of governmental
authorities having jurisdiction.
27. Compensation. As compensation for the services described
within this agreement and rendered by the Custodian during the term of this
Agreement, the Trust shall pay to the Custodian the fees provided on Attachment
B hereto, as it may be amended from time to time. In addition, the Trust agrees
to reimburse the Custodian for any out-of-pocket expenses described in
Attachment B to this Agreement, incurred in providing the services contained
within this Agreement.
28. Indemnification. (a) The Trust, on behalf of each Fund
individually and not jointly, as sole owner of the Property, agrees, to the
extent permitted by applicable law, to indemnify and hold harmless the Custodian
and its nominees from all taxes, charges, expenses, assessments, claims, and
liabilities (including, without limitation, liabilities arising under the 1933
Act, the Securities Exchange Act of 1934, the 1940 Act, and any state and
foreign securities and blue sky laws, all as or to be amended from time to time)
and expenses, including (without limitation) reasonable attorney's fees and
disbursements, arising directly or indirectly (a) from the fact that securities
included in the Property are registered in the name of any such nominee or (b)
without limiting the generality of the foregoing clause (a) from any action or
thing which the Custodian takes or does or omits to take or do (i) at the
request or on the direction of or in reliance on the advice of the Trust given
in accordance with the terms of this Agreement, or (ii) upon Proper
Instructions, provided, that neither the Custodian
- 25 -
<PAGE>
nor any of its nominees or subcustodian shall be indemnified against any
liability to the Trust or to its Shareholders (or any expenses incident to such
liability) (x) arising out of the Custodian's or such nominee's or
subcustodian's own willful misfeasance or negligence of its duties under this
Agreement or any agreement between the Custodian and any nominee or
subcustodian, or (y) constituting any incidental or consequential damages. In
the event of any advance of cash for any purpose made by the Custodian resulting
from Proper Instructions of the Trust, or in the event that the Custodian or its
nominee or subcustodian shall incur or be assessed any taxes, charges, expenses,
assessments, claims or liabilities in connection with the performance of this
Agreement, except such as may arise from its or its nominee's or subcustodian's
own negligence or willful misfeasance, the Trust shall promptly reimburse the
Custodian for such advance of cash or such taxes, charges, expenses,
assessments, claims or liabilities.
(b) Subject to the limitations set forth in this Agreement,
the Trust, on behalf of each Fund individually, and not jointly, agrees to
indemnify and hold harmless the Custodian and its nominees from all loss, damage
and expense (including reasonable attorney's fees) suffered or incurred by the
Custodian or its nominee caused by or arising from actions taken by the
Custodian in reliance upon Proper Instructions; provided, however, that such
indemnity shall not apply to (x) loss, damage or expense occasioned by or
resulting from the negligence or willful misfeasance of the Custodian or its
nominee or any material breach of this Agreement by the Custodian or its nominee
or (y) incidental or consequential damages. In addition, the Trust agrees to
indemnify the Custodian against any liability incurred by reason of taxes
assessed to the Custodian, or other loss, damage or expenses
- 26 -
<PAGE>
incurred by such person, resulting solely from the fact that securities and
other property of the Trust is registered in the name of such person; provided,
however, that in no event shall such indemnification be applicable to income,
franchise or similar taxes which may be imposed or assessed against the
Custodian.
29. Notice of Litigation, Right to Prosecute. The Custodian
shall promptly inform the Trust in writing of the commencement of any litigation
or proceeding in respect of which indemnity may be sought under the above
paragraph 28. The Trust shall be entitled to participate in any such litigation
or proceeding and, after written notice from the Trust to the Custodian, the
Trust may assume the defense of such litigation or proceeding with counsel of
its choice at its own expense. The Custodian shall not consent to the entry of
any judgement or enter into any settlement in any such litigation or proceeding
without providing the Trust with adequate notice of any such settlement or
judgement. The Custodian shall submit written evidence to the Trust with respect
to any cost or expense for which it is seeking indemnification in such form and
detail as the Trust may reasonably request.
30. Trust's Right to Proceed. Notwithstanding anything to the
contrary contained herein, the Trust shall have, at its election upon reasonable
notice to the Custodian, the right to enforce, to the extent permitted by any
applicable agreement and applicable law, the Custodian's rights against any
Subcustodian or Securities Depository for loss, damage or expense caused the
Custodian or the Trust by such Subcustodian or Securities Depository and shall
be entitled to enforce the rights of the Custodian with respect to any claim
against such Subcustodian or Securities Depository which the Custodian may have
as a consequence of such loss, damage or expense, if and to the extent that the
Trust has not been made whole for
- 27 -
<PAGE>
any such loss or damage. The Custodian agrees to cooperate with the Trust and
take all actions reasonably requested by the Trust in connection with the
Trust's enforcement of any rights of the Custodian. The Trust agrees to
reimburse the Custodian for all reasonable out-of-pocket expenses incurred by
the Custodian in connection with the fulfillment of its obligations as long as
the Custodian has not otherwise breached the terms of this Agreement.
31. Responsibility of the Custodian. The Custodian shall not
be required to take any action except as specifically set forth herein. The
Custodian shall be responsible for its own negligent failure or that of any
subcustodian it shall appoint to perform its duties under this Agreement.
Without limiting the generality of the foregoing or of any other provision of
this Agreement, the Custodian in connection with its duties under this Agreement
shall not be under any duty or obligation to inquire into and shall not be
liable for or in respect of (a) the validity or invalidity or authority or lack
thereof of any advice, direction, notice or other instrument which conforms to
the applicable requirements of this Agreement, if any, and which the Custodian
believes to be genuine, (b) the validity of the issue of any securities
purchased or sold by the Trust, the legality of the purchase or sale thereof or
the propriety of the amount paid or received therefore, (c) the legality of the
issue or sale of any Shares, or the sufficiency of the amount to be received
therefor, (d) the legality of the redemption of any Shares, or the propriety of
the amount to be paid therefore, (e) the legality of the declaration or payment
of any dividend or distribution on Shares, or (f) delays or errors or loss of
data occurring by reason of circumstances beyond the Custodian's control,
including acts of civil or military authority, national emergencies, labor
difficulties, fire, mechanical breakdown (except as provided in Paragraph 24),
flood or catastrophe, acts of God,
- 28 -
<PAGE>
insurrection, war, riots, or failure of the mail, transportation, communication
or power supply. In no event will the Custodian be liable for special, indirect
or consequential damages or lost profits or loss of business, which may be
suffered by the Trust or any third party, even if previously informed of the
possibility of such damages.
32. Collection. All collections of monies or other property in
respect, or which are to become part, of the Property (but not the safekeeping
thereof upon receipt by the Custodian) shall be at the sole risk of the Trust.
In any case in which the Custodian does not receive any payment due the Trust
within a reasonable time after the Custodian has made proper demands for the
same, it shall so notify the Trust in writing, including copies of all demand
letters, any written responses thereto, and memoranda of all oral responses
thereto, and to telephonic demands, and await instructions from the Trust. the
Custodian shall not be obliged to take legal action for collection unless and
until reasonably indemnified to its satisfaction. The Custodian shall also
notify the Trust as soon as reasonably practicable whenever income due on
securities is not collected in due course.
33. Duration and Termination. This Agreement shall be
effective as of the date hereof and shall continue until termination by the
Trust or by the Custodian on 60 day's written notice. Upon any termination of
this Agreement, pending appointment of a successor to the Custodian or a vote of
the Shareholders of the Trust to dissolve or to function without a custodian of
its cash, securities or other property, the Custodian shall not deliver cash,
securities or other property of the Trust to the Trust, but may deliver them to
a bank or trust company designated by the Trust or, failing that, to a bank or
trust company of the Custodian's selection, having aggregate capital, surplus
and undivided profits, as shown by its
- 29 -
<PAGE>
last published report of not less than twenty million dollars ($20,000,000) as a
successor custodian for the Trust to be held under terms similar to those of
this Agreement, provided, however, that the Custodian shall not be required to
make any such delivery or payment until full payment shall have been made by the
Trust of all liabilities constituting a charge on or against the properties then
held by the Custodian or on or against the Custodian and until full payment
shall have been made to the Custodian of all of its fee, compensation, costs and
expenses, subject to the provisions of Paragraph 26 of this Agreement. The
termination by the Trust of a particular Series or Fund within the Trust that
does not result in the closure of the Trust does not constitute termination of
this Agreement.
34. Notices. Notices shall be addressed,
If to the Trust: The Victory Portfolios
c/o BISYS Fund Services
3435 Stelzer Road
Columbus, OH 43219-3035
Attention: President
With a copy to: Kramer, Levin, Naftalis & Frankel
919 Third Avenue
New York, New York 10022
Attention: Jay G. Baris
If to the Custodian: Key Trust Company of Ohio, N.A.
127 Public Square
Cleveland, Ohio 44114 -1306
Attention: Division Head
Master Trust Division
or, if the address is to neither of the foregoing, at such other address as
shall have been notified to the sender of any such Notice or other
communication. If the location of the sender of a Notice and the address of the
addressee thereof are, at the time of sending, more than 100 miles apart, the
Notice may be sent by first-class mail, in which case it shall be
- 30 -
<PAGE>
deemed to have been given three days after it is sent, or if sent by confirming
telegram, cable, telex or facsimile sending device, it shall be deemed to have
been given immediately, and, if the location of the sender of a Notice and the
address of the addressee thereof are, at the time of sending, not more than 100
miles apart, the Notice may be sent by first-class mail, in which case it shall
be deemed to have been given two days after it is sent, or if sent by messenger,
it shall be deemed to have been given on the day it is delivered, or if sent by
confirming telegram, cable, telex or facsimile sending device, it shall be
deemed to have been given immediately. All postage, cable, telegram, telex and
facsimile sending device charges arising from the sending of a Notice hereunder
shall be paid by the sender.
35. Applicability of Agreement to Funds Individually, not
Jointly. The Trust has entered into this Agreement on behalf of each Fund listed
on Attachment A individually, and not jointly. The rights and obligations of the
Trust described in this Agreement apply to each individual Fund. No Fund shall
have any liability for any costs or expenses incurred by any other Fund. In
seeking to enforce a claim against any Fund, the Custodian shall look to the
assets only of that Fund and not to the assets of any other Fund.
36. Further Actions. Each party agrees to perform such further
acts and execute such further documents as are necessary to effectuate the
purposes hereof.
37. Amendments. This Agreement or any part hereof may be
changed or waived only by an instrument in writing signed by the party against
which enforcement of such change or waiver is sought.
38. Liability of Trustees and Shareholders. A copy of the
Certificate of Trust of the Fund is on file with the Secretary of The
Commonwealth of Massachusetts, and notice
- 31 -
<PAGE>
is hereby given that this instrument is executed on behalf of the trustees of
the Fund as trustees and not individually and that the obligations of this
instrument are not binding upon any of the Trustees or shareholders individually
but are binding only upon the assets and property of the Fund.
39. Miscellaneous. This Agreement embodies the entire
Agreement and understanding between the parties hereto, and supersedes all prior
agreements and understandings relating to the parties hereto. The captions in
this Agreement are included for convenience of reference only and in no way
define or delimit any of the provisions hereof or otherwise affect their
construction or effect. This Agreement shall be deemed to be a contract made in
New York and governed by New York law. If any provision of this Agreement shall
be held or made invalid by a court decision, statute, rule or otherwise, the
remainder of this Agreement shall not be affected thereby. This Agreement shall
be binding upon and shall inure to the benefit of the parties hereto and their
respective successors.
- 32 -
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their officers designated below as of the day and
year first above written.
and: /s/
----------------- KEY TRUST COMPANY OF OHIO, N.A.
Vice President
Attest: /s/ Meg H. Halloran By: /s/ Kathryn Kaesberg
-------------------- --------------------
Name: Meg H. Halloran Name: Kathryn Kaesberg
Title: Trust Officer Title: Vice President
THE VICTORY PORTFOLIOS, on behalf of each
Fund listed on Attachment A, individually
and not jointly
Attest: /s/ George O. Martinez By: /s/ Scott A. Englehart
---------------------- ----------------------
Name: George O. Martinez Name: Scott A. Englehart
Title: Assistant Secretary Title: Secretary
- 33 -
<PAGE>
ATTACHMENT A
NAME OF FUND
1. The Victory Balanced Fund
2. The Victory Diversified Stock Fund
3. The Victory Financial Reserves Fund
4. The Victory Fund for Income
5. The Victory Government Bond Fund
6. The Victory Government Mortgage Fund
7. The Victory Growth Fund
8. The Victory Institutional Money Market Fund
9. The Victory Intermediate Income Fund
10. The Victory International Growth Fund
11. The Victory Investment Quality Bond Fund
12. The Victory Limited Term Income Fund
13. The Victory National Municipal Bond Fund
14. The Victory New York Tax-Free Fun
15. The Victory Ohio Municipal Bond Fund
16. The Victory Ohio Municipal Money Market Fund
17. The Victory Ohio Regional Stock Fund
18. The Victory Prime Obligations Fund
19. The Victory Special Growth Fund
20. The Victory Special Value Fund
21. The Victory Stock Index Fund
22. The Victory Tax-Free Money Market Fund
23. The Victory U.S. Government Obligations Fund
24. The Victory Value Fund
- 34 -
<PAGE>
ATTACHMENT A
AMENDED AS OF MARCH 1, 1997
NAME OF FUND
1. The Victory Balanced Fund
2. The Victory Diversified Stock Fund
3. The Victory Financial Reserves Fund
4. The Victory Fund for Income
5. The Victory Government Bond Fund
6. The Victory Government Mortgage Fund
7. The Victory Growth Fund
8. The Victory Institutional Money Market Fund
9. The Victory Intermediate Income Fund
10. The Victory International Growth Fund
11. The Victory Investment Quality Bond Fund
12. The Victory Limited Term Income Fund
13. The Victory National Municipal Bond Fund
14. The Victory New York Tax-Free Fun
15. The Victory Ohio Municipal Bond Fund
16. The Victory Ohio Municipal Money Market Fund
17. The Victory Ohio Regional Stock Fund
18. The Victory Prime Obligations Fund
19. The Victory Special Growth Fund
20. The Victory Special Value Fund
21. The Victory Stock Index Fund
22. The Victory Tax-Free Money Market Fund
23. The Victory U.S. Government Obligations Fund
24. The Victory Value Fund
25. The Victory Lakefront Fund
26. The Victory Real Estate Investment Fund
- 34 -
<PAGE>
SCHEDULE A
VICTORY FUNDS
1. Victory U.S. Government Obligations Fund
2. Victory Prime Obligations Fund
3. Victory Tax-Free Money Market Fund
4. Victory Limited Term Income Fund
5. Victory Government Mortgage Fund
6. Victory Intermediate Income Fund
7. Victory Investment Quality Bond Fund
8. Victory Ohio Municipal Bond Fund
9. Victory Balanced Fund
10. Victory Stock Index Fund
11. Victory Value Fund
12. Victory Diversified Stock Fund
13. Victory Growth Fund
14. Victory Special Value Fund
15. Victory Special Growth Fund
16. Victory Ohio Regional Stock Fund
17. Victory International Growth Fund
18. Victory Financial Reserves Fund
19. Victory Fund for Income
20. Victory Institutional Money Market Fund
21. Victory National Municipal Bond Fund
22. Victory New York Tax-Free Fund
23. Victory Ohio Municipal Money Market Fund
24. Victory Lakefront Fund
25. Victory Real Estate Investment Fund
26. Victory Federal Money Market Fund
27. Victory Convertible Securities Fund
28. Victory LifeChoice Growth Investor Fund
29. Victory LifeChoice Moderate Investor Fund
30. Victory LifeChoice Conservative Investor Fund
Revised March 1998
<PAGE>
SCHEDULE A
Amended as of May 29, 1998
<TABLE>
<CAPTION>
<S> <C>
Victory Balanced Fund Victory Federal Money Market Fund
Class A Shares Investor Shares
Class B Shares Select Shares
Victory Diversified Stock Fund Victory Convertible Securities Fund
Class A Shares Victory LifeChoice Conservative Investor Fund
Class B Shares Victory LifeChoice Growth Investor Fund
Victory Government Mortgage Fund Victory LifeChoice Moderate Investor Fund
Victory Growth Fund Victory Maine Municipal Bond Fund (Intermediate)
Victory Financial Reserves Fund Victory Maine Municipal Bond Fund
Victory Fund for Income (Short-Intermediate)
Victory Institutional Money Market Fund Victory Michigan Municipal Bond Fund
Investor Shares Victory Equity Income Fund
Select Shares Victory National Municipal Bond Fund (Long)
Victory Intermediate Income Fund Victory National Municipal Bond Fund
Victory International Growth Fund (Short-Intermediate)
Class A Shares
Class B Shares
Victory Investment Quality Bond Fund
Victory Lakefront Fund
Victory Limited Term Income Fund
Victory National Municipal Bond Fund
Class A Shares
Class B Shares
Victory New York Tax-Free Fund
Class A Shares
Class B Shares
Victory Ohio Municipal Bond Fund
Victory Ohio Municipal Money Market
Fund
Victory Ohio Regional Stock Fund
Class A Shares
Class B Shares
Victory Prime Obligations Fund
Victory Real Estate Investment Fund
Victory Special Growth Fund
Victory Special Value Fund
Class A Shares
Class B Shares
Victory Stock Index Fund
Victory Tax-Free Money Market Fund
Victory U.S. Government Obligations Fund
Investor Shares
Select Shares
Victory Value Fund
</TABLE>
<PAGE>
ATTACHMENT B
CUSTODY SERVICE FEES
For the services as described in this Agreement, each Fund of the Trust listed
on Attachment A hereto shall pay a custody safekeeping fee and custody
transaction fees as follows:
DOMESTIC CUSTODY SAFEKEEPING FEES
.018% (1.8 Basis Points) on the assets of the Funds
DOMESTIC CUSTODY TRANSACTION FEES
$15.00 per DTC or Fed Book Entry transaction $25.00 per
physical transaction $40.00 per future or option wire $15.00
per Government Paydown $ 8.00 per wire transfer
GLOBAL CUSTODY SAFEKEEPING FEES
.15% on first $250,000,00 in assets per Fund
.12% on assets in excess of $250,000,000 per Fund
GLOBAL CUSTODY TRANSACTION FEES (BY COUNTRY)
GROUP I GROUP II
Austria Australia
Belgium Canada
Denmark France
Finland Hong Kong
Germany Italy
Japan Netherlands
Norway Singapore/Malaysia
Sweden Spain
Switzerland United Kingdom
CEDEL/Euroclear Eligible Other Fixed Income
Fixed Income
$40.00 PER TRANSACTION $80.00 PER TRANSACTION
- 37 -
<PAGE>
MARCH 2, 1998
ATTACHMENT B (CONT.)
VICTORY FUNDS EXCEPTIONS
Victory Growth Investor Fund
Victory Moderate Investor Fund
Victory Conservative Investor Fund
No Custody Charge Applies.
Transaction Charges Apply Per Domestic and Foreign Schedules on Page 1.
- 38 -
ADMINISTRATION AGREEMENT
This Administration Agreement is made as of this 1st day of October,
1997 between THE VICTORY PORTFOLIOS, a Delaware business trust (herein called
the "Trust"), and BISYS Fund Services Limited Partnership, an Ohio limited
partnership (herein called "BISYS").
WHEREAS, the Trust is an open-end, management investment company
registered under the Investment Company Act of 1940, as amended, and consisting
of the investment portfolios set forth on Schedule I hereto, as such Schedule
may be revised from time to time (individually, a "Fund" and collectively, the
"Funds");
WHEREAS, the Trust offers for sale shares of beneficial interest
without par value of the Funds (herein collectively called "Shares"); and
WHEREAS, the Trust desires to retain BISYS as its Administrator to
provide it with certain administrative services with respect to each of the
Funds and their respective Shares, and BISYS is willing to render such services.
NOW, THEREFORE, in consideration of the premises and mutual covenants
set forth herein, the parties hereto agree as follows:
I. DELIVERY OF DOCUMENTS
The Trust has delivered to BISYS copies of each of the following
documents and will deliver to it all future amendments and supplements thereto,
if any:
(a) The Trust's Certificate of Trust and all amendments
thereto (such Certificate of Trust, as presently in effect and as it
shall from time to time be amended, herein called the "Trust's
Certificate");
(b) The By-Laws of the Trust (such By-Laws as presently in
effect and as they shall from time to time be amended, herein called
the "By-Laws");
(c) Resolutions of the Board of Trustees of the Trust
authorizing the execution and delivery of this Agreement;
(d) The Trust's most recent Post-Effective Amendment to its
Registration Statement(s) under the Securities Act of 1933, as amended
(the "1933 Act"), and under the Investment Company Act of 1940, as
amended (the "1940 Act"), on Form N-1A as filed with the Securities and
Exchange Commission (the "Commission") relating to the Shares and any
further amendment thereto;
<PAGE>
(e) Notification of registration of the Trust under the 1940
Act on Form N-8A as filed with the Commission; and
(f) Prospectuses and Statements of Additional Information of
the Trust with respect to the Funds (such prospectuses and statements
of additional information, as presently in effect and as they shall
from time to time be amended and supplemented, herein called
individually the "Prospectus" and collectively the "Prospectuses").
II. ADMINISTRATION
1. APPOINTMENT OF ADMINISTRATOR. The Trust hereby appoints BISYS as its
Administrator for each of the Funds on the terms and for the period set forth in
this Agreement and BISYS hereby accepts such appointment and agrees to perform
the services and duties set forth in this Section II for the compensation
provided in this Section II. The Trust understands that BISYS now acts and will
continue to act as administrator of various investment companies, and the Trust
has no objection to BISYS' so acting. In addition, it is understood that the
persons employed by BISYS to assist in the performance of its duties hereunder,
will not devote their full time to such services and nothing herein contained
shall be deemed to limit or restrict the right of BISYS or any affiliate of
BISYS to engage in and devote time and attention to other businesses or to
render services of whatever kind or nature.
2. SERVICES AND DUTIES.
(a) As Administrator, and subject to the supervision and
control of the Trust's Board of Trustees, BISYS will provide
facilities, equipment, statistical and research data, clerical
services, internal compliance services relating to legal matters, and
personnel to carry out all administrative services required for
operation of the business and affairs of the Trust, other than those
investment advisory functions which are to be performed by the Trust's
investment advisers, the services of BISYS as Distributor pursuant to
the Distribution Agreement, those services to be performed by the
Trust's custodian, transfer agent and fund accounting agent, and those
services normally performed by the Trust's counsel and auditors. BISYS'
responsibilities include without limitation the following services:
(1) Providing a facility to receive purchase and
redemption orders via toll-free IN-WATTS telephone lines or
via electronic transmission;
(2) Providing for the preparing, supervising and
mailing of confirmations for wire, telephone and electronic
purchase and redemption orders;
(3) Providing and supervising the operation of an
automated data processing system to process purchase and
redemption orders received by BISYS (BISYS
2
<PAGE>
assumes responsibility for the accuracy of the data
transmitted for processing or storage);
(4) Overseeing the performance of the Trust's
custodian and transfer agent;
(5) Making available information concerning each Fund
to its shareholders; distributing written communications to
each Fund's shareholders of record such as periodic listings
of each Fund's securities, annual and semi-annual reports, and
Prospectuses and supplements thereto; and handling shareholder
problems and calls relating to administrative matters; and
(6) Providing and supervising the services of
employees whose principal responsibility and function shall be
to preserve and strengthen each Fund's relationships with its
shareholders.
(b) BISYS shall assure that persons are available to transmit
wire, telephone or electronic redemption requests to the Trust's
transfer agent as promptly as practicable.
(c) BISYS shall assure that persons are available to transmit
wire, telephone or electronic orders accepted for the purchase of
Shares to the Trust's transfer agent as promptly as practicable.
(d) BISYS shall participate in the periodic updating of the
Prospectuses and shall coordinate (i) the filing, printing and
dissemination of reports to each Fund's shareholders and the
Commission, including but not limited to annual reports and semi-annual
reports on Form N-SAR and notices pursuant to Rule 24f-2, (ii) the
preparation, filing, printing and dissemination of proxy materials, and
(iii) the preparation and filing of post-effective amendments to the
Trust's Registration Statement on Form N-1A relating to the updating of
financial information and other routine matters.
(e) BISYS shall pay all costs and expenses of maintaining the
offices of the Trust, wherever located, and shall arrange for payment
by the Trust of all expenses payable by the Trust.
(f) BISYS, after consultation with legal counsel for the
Trust, shall determine the jurisdictions in which the Shares shall be
registered or qualified for sale and, in connection therewith, shall be
responsible for the maintenance of the registration or qualification of
the Shares for sale under the securities laws of any state. Payment of
share registration fees and any fees for qualifying or continuing the
qualification of the Funds shall be made by the Funds.
3
<PAGE>
(g) BISYS shall provide the services of certain persons who
may be appointed as officers of the Trust by the Trust's Board of
Trustees.
(h) BISYS shall oversee the maintenance by the Trust's
custodian and transfer agent of the books and records required under
the 1940 Act in connection with the performance of the Trust's
agreements with such entities, and shall maintain, or provide for the
maintenance of, such other books and records (other than those required
to be maintained by the Trust's investment advisers and fund accounting
agent) as may be required by law or may be required for the proper
operation of the business and affairs of the Trust and each Fund. In
compliance with the requirements of Rule 31a-3 under the 1940 Act,
BISYS agrees that all such books and records which it maintains, or is
responsible for maintaining, for the Funds are the property of the
Trust and further agrees to surrender promptly to the Trust any of such
books and records upon the Trust's request. BISYS further agrees to
preserve for the periods prescribed by Rule 31a-2 under the 1940 Act
said books and records required to be maintained by Rule 31a-1 under
said Act.
(i) BISYS shall coordinate the preparation of the Funds'
federal, state and local income tax returns.
(j) BISYS shall prepare such other reports relating to the
business and affairs of the Trust and each Fund (not otherwise
appropriately prepared by the Trust's investment adviser, transfer
agent, fund accounting agent or the Trust's counsel or auditors) as the
officers and Trustees of the Trust may from time to time reasonably
request in connection with the performance of their duties.
(k) In performing its duties as Administrator of the Trust,
BISYS will act in conformity with the Trust's Certificate, By-Laws and
Prospectuses and with the instructions and directions of the Board of
Trustees of the Trust and will conform to and comply with the
requirements of the 1940 Act and all other applicable federal or state
laws and regulations.
3. SUBCONTRACTORS. It is understood that BISYS may from time to time
employ or associate with itself such person or persons reasonably acceptable to
the Trust as BISYS may believe to be particularly fitted to assist in the
performance of this Agreement; provided, however, that the compensation of such
persons shall be paid by BISYS and that BISYS shall be as fully responsible to
the Trust for the acts and omissions of any subcontractor as it is for its own
acts and omissions.
4. EXPENSES ASSUMED AS ADMINISTRATOR. Except as otherwise stated in
this subsection 4, BISYS shall pay all expenses incurred by it in performing its
services and duties as Administrator, including the cost of providing office
facilities, equipment and personnel related to such services and duties. Other
expenses incurred in the operation of the Trust (other than those borne by the
Trust's investment adviser) including taxes, interest, brokerage fees and
commissions, if any, fees of trustees who are not officers, directors, partners,
employees or holders of 5 percent or more of the
4
<PAGE>
outstanding voting securities of the Trust's investment advisers or BISYS or any
of their affiliates, Securities and Exchange Commission fees and state blue sky
registration or qualification fees, advisory fees, charges of custodians,
transfer and dividend disbursing agents' fees, fund accounting agents' fees,
fidelity bond and trustees' and officers' errors and omissions insurance
premiums, outside auditing and legal expenses, costs of maintaining corporate
existence, costs attributable to shareholder services, including without
limitation telephone and personnel expenses, costs of preparing and printing
Prospectuses for regulatory purposes and for distribution to existing
shareholders, costs of shareholders' reports and Trust meetings and any
extraordinary expenses will be borne by the Trust.
5. COMPENSATION. For the services provided and the expenses assumed as
Administrator pursuant to this Article II, the Trust will pay BISYS a fee,
computed daily and payable monthly, at the annual rate set forth in Schedule II
hereto. Such fee as is attributable to each Fund shall be a separate (and not
joint or joint and several) obligation of each such Fund. No individual Fund
shall have any responsibility for any obligation, if any, with respect to any
other Fund arising out of this Agreement.
III. CONFIDENTIALITY
BISYS will treat confidentially and as proprietary information of the
Trust all records and other information relative to the Trust and the Funds and
their prior or present shareholders or those persons or entities who respond to
BISYS' inquiries concerning investment in the Trust, and except as provided
below, will not use such records and information for any purpose other than
performance of its responsibilities and duties hereunder, or the performance of
its responsibilities and duties with regard to any other investment portfolio
which may be added to the Trust in the future. Any other use by BISYS of the
information and records referred to above may be made only after prior
notification to and approval in writing by the Trust. Such approval shall not be
unreasonably withheld and may not be withheld where (i) BISYS may be exposed to
civil or criminal contempt proceedings for failure to divulge such information;
(ii) BISYS is requested to divulge such information by duly constituted
authorities; or (iii) BISYS is so requested by the Trust.
IV. LIMITATION OF LIABILITY
BISYS shall not be liable for any error of judgment or mistake of law
or for any loss suffered by the Trust in connection with the matters to which
this Agreement relates, except a loss resulting from willful misfeasance, bad
faith or negligence on its part in the performance of its duties or from its
reckless disregard of its obligations and duties under this Agreement. Any
person, even though also an officer, director, partner, employee or agent of
BISYS, who may be or become an officer, trustee, employee or agent of the Trust,
shall be deemed, when rendering services to the Trust, or acting on any business
of the Trust (other than services or business in connection with BISYS' duties
hereunder) to be rendering such services to or acting solely for the Trust and
not as an officer,
5
<PAGE>
director, partner, employee or agent or one under the control or direction of
BISYS even though paid by BISYS.
V. DURATION AND TERMINATION
This Agreement shall become effective as of the date first above
written, and, unless sooner terminated as provided herein, shall continue until
September 30, 1999. Thereafter, if not terminated, this Agreement shall continue
automatically as to a particular Fund for successive terms of two years,
provided that such continuance is specifically approved (a) by a vote of a
majority of those members of the Board of Trustees of the Trust who are not
parties to this Agreement or "interested persons" of any such party, cast in
person at a meeting called for the purpose of voting on such approval, and (b)
by the Board of Trustees of the Trust or by vote of a "majority of the
outstanding voting securities" of such Fund. This Agreement may be terminated
without penalty (i) by provision of a notice of nonrenewal in the manner set
forth below, (ii) by mutual agreement of the parties or (iii) for "cause," as
defined below, upon the provision of 60 days advance written notice by the party
alleging cause. Written notice of nonrenewal must be provided at least 60 days
prior to the end of the then-current term.
For purposes of this Agreement, "cause" shall mean (a) a material
breach that has not been cured within thirty (30) days following written notice
of such breach from the non-breaching party; (b) a final, unappealable judicial,
regulatory or administrative ruling or order in which the party to be terminated
has been found guilty of criminal or unethical behavior in the conduct of its
business; (c) financial difficulties on the part of the party to be terminated
which are evidenced by the authorization or commencement of, or involvement by
way of pleading, answer, consent or acquiescence in, a voluntary or involuntary
case under Title 11 of the United States Code, as from time to time is in
effect, or any applicable law, other than said Title 11, of any jurisdiction
relating to the liquidation or reorganization of debtors or to the modification
or alteration of the rights of creditors; or (d) any circumstance which
substantially impairs the performance of the obligations and duties of the party
to be terminated, or the ability to perform those obligations and duties, as
contemplated herein.
The parties acknowledge that, in the event of a change of control (as
defined in the 1940 Act) of BISYS or of Key Asset Management Inc., BISYS may be
replaced as administrator for the Trust prior to the expiration of the initial
two-year term or any subsequent two-year term. In that connection, the parties
agree that, notwithstanding the replacement of BISYS as referenced above, the
Trust shall remain responsible for the payment of fees to BISYS hereunder for
the remainder of the then-current contract term.
Compensation due BISYS and unpaid by the Trust upon termination of this
Agreement shall be immediately due and payable upon and notwithstanding such
termination. BISYS shall be entitled to collect from the Trust in addition to
the compensation described in Schedule II hereto, the amount of all its cash
disbursements for services in connection with its activities in effecting such
6
<PAGE>
termination, including without limitation, the delivery to the Trust and/or its
designees of the Trust's property, records, instruments and documents or any
copies thereof. Subsequent to such termination, for a reasonable fee, BISYS will
provide the Trust with reasonable access to any Trust documents or records
remaining in its possession.
VI. AMENDMENT OF THIS AGREEMENT
No provisions of this Agreement may be changed, waived, discharged or
terminated, except by an instrument in writing signed by the party against whom
an enforcement of the change, waiver, discharge or termination is sought.
VII. NOTICES
Notices of any kind to be given to the Trust hereunder by BISYS shall
be in writing and shall be duly given if mailed or delivered to the Trust c/o
Mutual Fund Products, KeyCorp Management Company, 127 Public Square, Cleveland,
Ohio 44114, with a copy to Kramer, Levin, Naftalis & Frankel, 919 Third Avenue,
New York, New York 10019, Attention: Carl Frischling, Esquire, or at such other
address or to such individual as shall be so specified by the Trust to BISYS.
Notices of any kind to be given to BISYS hereunder by the Trust shall be in
writing and shall be duly given if mailed or delivered to BISYS at 3435 Stelzer
Road, Columbus, Ohio 43219, Attention: George O. Martinez, Esq., or at such
other address or to such individual as BISYS shall specify to the Trust.
VIII. MISCELLANEOUS
1. CONSTRUCTION. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. Subject to the provisions of Article V hereof, this Agreement
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective successors and shall be governed by Ohio law; provided,
however, that nothing herein shall be construed in a manner inconsistent with
the 1940 Act or any rule or regulation of the Commission thereunder.
2. NAMES. The names "The Victory Portfolios" and "Trustees of The
Victory Portfolios" refer respectively to the Trust created and the Trustees, as
trustees but not individually or personally, acting from time to time under a
Certificate of Trust filed on December 21, 1995 at the office of the Secretary
of State of the State of Delaware which is hereby referred to and is also on
file at the principal office of the Trust. The obligations of The Victory
Portfolios entered into in the name or
7
<PAGE>
on behalf thereof by any of its trustees, representatives or agents are made not
individually, but in such capacities and are not binding upon any of the
trustees, shareholders or representatives of the Trust personally but bind only
the Trust property, and all persons dealing with any class of shares of the
Trust must look solely to the Trust property belonging to such class for the
enforcement of any claims against the Trust.
3. ASSIGNMENT. This Agreement and the rights and duties hereunder shall
not be assignable by either party without the written consent of the other
party. This paragraph shall not limit or in any way affect BISYS' right to
appoint a Sub-Administrator pursuant to Article II, paragraph 3 hereof.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the day and year first
above written.
THE VICTORY PORTFOLIOS
By: /s/ J. David Huber
-------------------------------------
Attest: /s/ Thomas E. Line
-----------------------
BISYS FUND SERVICES LIMITED
PARTNERSHIP, d/b/a
BISYS FUND SERVICES
By: BISYS FUND SERVICES, INC.
General Partner
Attest: /s/ Thomas E. Line
-----------------------
By: /s/ George O. Martinez
----------------------------
Senior Vice President
8
<PAGE>
SCHEDULE I
Amended as of October 1, 1997
Name of Fund Class
- ------------ -----
1. The Victory Balanced Fund A/B
2. The Victory Diversified Stock Fund A/B
3. The Victory Government Mortgage Fund A
4. The Victory Growth Fund A
5. The Victory Intermediate Income Fund A
6. The Victory International Growth Fund A/B
7. The Victory Investment Quality Bond Fund A
8. The Victory Limited Term Income Fund A
9. The Victory Ohio Municipal Bond Fund A
10. The Victory Ohio Regional Stock Fund A/B
11. The Victory Prime Obligations Fund A
12. The Victory Special Growth Fund A
13. The Victory Special Value Fund A/B
14. The Victory Stock Index Fund A
15. The Victory Tax-Free Money Market Fund A
16. The Victory U.S. Government Obligations Fund Investor/Select
17. The Victory Value Fund A
18. The Victory Financial Reserves Fund A
19. The Victory Fund for Income A
20. The Victory Institutional Money Market Fund Investor/Select
21. The Victory National Municipal Bond Fund A/B
22. The Victory New York Tax-Free Fund A/B
23. The Victory Ohio Municipal Money Market Fund A
24. The Victory Lakefront Fund A
25. The Victory Real Estate Investment Fund A
<PAGE>
SCHEDULE I
Amended as of March 2, 1998
- --------------------------------------------------------------------------------
1. Victory Balanced Fund 26. Victory Federal Money Market Fund
Class A Shares Investor Shares
Class B Shares Select Shares
Key Shares 27. Victory Convertible Securities Fund
2. Victory Diversified Stock Fund 28. Victory LifeChoice Conservative
Class A Shares Investor Fund
Class B Shares 29. Victory LifeChoice Growth
3. Victory Government Mortgage Fund Investor Fund
4. Victory Growth Fund 30. Victory LifeChoice Moderate
5. Victory Financial Reserves Fund Investor Fund
6. Victory Fund for Income
7. Victory Institutional Money Market Fund
Investor Shares
Select Shares
8. Victory Intermediate Income Fund
9. Victory International Growth Fund
Class A Shares
Class B Shares
10. Victory Investment Quality Bond Fund
11. Victory Lakefront Fund
12. Victory Limited Term Income Fund
13. Victory National Municipal Bond Fund
Class A Shares
Class B Shares
14. Victory New York Tax-Free Fund
Class A Shares
Class B Shares
15. Victory Ohio Municipal Bond Fund
16. Victory Ohio Municipal Money Market Fund
17. Victory Ohio Regional Stock Fund
Class A Shares
Class B Shares
18. Victory Prime Obligations Fund
19. Victory Real Estate Investment Fund
20. Victory Special Growth Fund
21. Victory Special Value Fund
Class A Shares
Class B Shares
22. Victory Stock Index Fund
23. Victory Tax-Free Money Market Fund
24. Victory U.S. Government Obligations Fund
Investor Shares
Select Shares
25. Victory Value Fund
- --------------------------------------------------------------------------------
<PAGE>
SCHEDULE I
Amended as of May 29, 1998
<TABLE>
<CAPTION>
<S> <C>
1. Victory Balanced Fund 26.Victory Federal Money Market Fund
Class A Shares Investor Shares
Class B Shares Select Shares
2. Victory Diversified Stock Fund 27.Victory Convertible Securities Fund
Class A Shares 28.Victory LifeChoice Conservative Investor Fund
Class B Shares 29.Victory LifeChoice Growth Investor Fund
3. Victory Government Mortgage Fund 30.Victory LifeChoice Moderate Investor Fund
4. Victory Growth Fund 31.Victory Maine Municipal Bond Fund (Intermediate)
5. Victory Financial Reserves Fund 32.Victory Maine Municipal Bond Fund (Short-Intermediate)
6. Victory Fund for Income 33.Victory Michigan Municipal Bond Fund
7. Victory Institutional Money Market Fund 34.Victory Equity Income Fund
Investor Shares 35.Victory National Municipal Bond Fund (Long)
Select Shares 36.Victory National Municipal Bond Fund
8. Victory Intermediate Income Fund (Short-Intermediate)
9. Victory International Growth Fund
Class A Shares
Class B Shares
10.Victory Investment Quality Bond Fund
11.Victory Lakefront Fund
12.Victory Limited Term Income Fund
13.Victory National Municipal Bond Fund
Class A Shares
Class B Shares
14.Victory New York Tax-Free Fund
Class A Shares
Class B Shares
15.Victory Ohio Municipal Bond Fund
16.Victory Ohio Municipal Money Market
Fund
17.Victory Ohio Regional Stock Fund
Class A Shares
Class B Shares
18.Victory Prime Obligations Fund
19.Victory Real Estate Investment Fund
20.Victory Special Growth Fund
21.Victory Special Value Fund
Class A Shares
Class B Shares
22.Victory Stock Index Fund
23.Victory Tax-Free Money Market Fund
24.Victory U.S. Government Obligations Fund
Investor Shares
Select Shares
25.Victory Value Fund
</TABLE>
<PAGE>
SCHEDULE II
FEES
Pursuant to ARTICLE II, Section 5 of the Agreement, BISYS shall be
entitled to receive a fee based upon the annual rate set forth below:
Average Daily Net
Assets of each Fund Fee Amount
First $300 million Fifteen one-hundredths of one percent
(.15%) of such Fund's average daily
net assets
Next $300 million Twelve one-hundredths of one percent
(.12%) of such Fund's average daily
net assets
All assets exceeding $600 million Ten one-hundredths of one percent
(.10%) of such Fund's average daily
net assets
<PAGE>
SCHEDULE II-B
FEES
Amended as of March 2, 1998
Pursuant to ARTICLE II, Section 5 of the Agreement, BISYS shall be
entitled to receive a fee based upon the annual rate set forth below for the
LifeChoice Funds only:
Fee Amount
----------
One-hundredths of one-percent (.01%) of each Fund's average
daily net assets or $12,000 per Fund per year, whichever is greater.
Such fee as is attributable to each Fund shall be a separate
(and not joint or joint and several) obligation of each such Fund. No
individual shall have any responsibility for any obligation, if any,
with respect to any other Fund arising out of this Agreement.
SUB-ADMINISTRATION AGREEMENT
AGREEMENT made this 1st day of October, 1997, between BISYS Fund
Services Limited Partnership d/b/a BISYS Fund Services (the "Administrator"), an
Ohio limited partnership having its principal place of business at 3435 Stelzer
Road, Columbus, Ohio 43219, and Key Asset Management Inc. (the
"Sub-Administrator"), a New York corporation having its principal place of
business at 127 Public Square, Cleveland, Ohio 44114.
WHEREAS, the Administrator has entered into a Management and
Administration Agreement, dated October 1, 1997 ("Administration Agreement"),
with The Victory Portfolios (the "Trust"), a Delaware business trust, concerning
the provision of management and administrative services for the investment
portfolios of the Trust identified on Schedule A hereto, as such Schedule shall
be amended from time to time (individually referred to herein as a "Fund" and
collectively as the "Funds"); and
WHEREAS, the Administrator desires to retain the Sub-Administrator to
assist it in performing administrative services with respect to each Fund and
the Sub-Administrator is willing to perform such services on the terms and
conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual premises and covenants
herein set forth, the parties agree as follows:
1. Services as Sub-Administrator. As provided herein, the
Sub-Administrator will perform the following duties:
(a) assist the Trust in the supervision of all aspects of
the operations of the Funds except those performed by
the investment adviser for the Funds under its
Investment Advisory Agreement;
(b) maintain office facilities (which may be in the
office of Sub-Administrator or an affiliate);
(c) furnish statistical and research data, clerical and
internal compliance services relating to legal
matters, except for those services provided pursuant
to the terms of the Fund Accounting Agreement;
(d) assist the Administrator in the preparation of the
periodic reports to the Securities and Exchange
Commission on Form N -SAR or any replacement forms
thereto;
<PAGE>
(e) assist the Administrator in compiling data for (after
review by the Trust's auditors) the Funds' federal
and state tax returns and required tax filings other
than those required to be made by the Trust's
Custodian and Transfer Agent;
(f) assist the Administrator in preparing and filing
compliance filings pursuant to state securities laws
with the advice of the Trust's counsel and coordinate
with the transfer agent to monitor the sale of the
Funds' shares;
(g) assist the Trust in the preparation, mailing and
filing of the Trust's Annual and Semi-Annual Reports
to Shareholders and its Registration Statements;
(h) assist the Administrator in preparing and filing
timely Notices to the Securities and Exchange
Commission required pursuant to Rule 24f-2 under the
Investment Company Act of 1940 (the "1940 Act")
(i) assist the Administrator in preparing and filing with
the Securities and Exchange Commission all
Registration Statements on Form N-1A and all
amendments thereto with the advice of Trust's
counsel;
(j) assist the Administrator in preparing and filing with
the Securities and Exchange Commission Proxy
Statements and related documents with the advice of
Trust's counsel and coordinate the distribution of
such documents; and
(k) provide Trustee Board meeting support, including
assisting in the preparation of documents related
thereto.
The Sub-Administrator will keep and maintain all books and
records relating to its services in accordance with Rule 31a-1 under the 1940
Act.
2. Compensation; Expenses Assumed as Sub-Administrator. The
Administrator will pay the Sub-Administrator for the services provided under
this Agreement a fee with respect to each Fund calculated at the annual rate of
up to five one-hundredths of one percent (.05%) of such Fund's average daily net
assets. Except for the expenses that shall be borne by the Trust, as set forth
in Article II, Section 4 of the Administration Agreement, the Sub-Administrator
shall pay all expenses incurred by it in performing its services and duties as
Sub-Administrator, including the cost of providing office facilities, equipment
and personnel related to such services and duties. The fee payable hereunder
shall be calculated and paid on a monthly basis. The fee for the period from the
day of the month this Agreement is entered into until the end of that month
shall be prorated according to the proportion which such period bears the full
monthly period. Upon any termination of this Agreement before the end of any
month, the fee for such part of a month shall be prorated according to the
proportion which such period bears to the full monthly period and shall be
payable upon the date of termination of this Agreement.
2
<PAGE>
For the purpose of determining fees payable to the Sub-Administrator,
the value of the net assets of a particular Fund shall be computed in the manner
described in the Trust's Agreement and Declaration of Trust or in the prospectus
or Statement of Additional Information respecting the Fund as from time to time
in effect for the computation of the value of such net assets in connection with
the determination of the liquidating value of the shares of such Fund.
3. Effective Date. This Agreement shall become effective with respect
to a Fund as of the date first written above (or, if a particular Fund is not in
existence on that date, on the date specified in the amendment to Schedule A to
this Agreement relating to such Fund or, if no date is specified, the date on
which such amendment is executed).
4. Term. This Agreement shall continue in effect with respect to a
Fund, unless earlier terminated by either party hereto as provided hereunder,
until September 30, 1999, and thereafter shall be renewed automatically for
successive one-year terms unless written notice not to renew is given by the
non-renewing party to the other party at least 60 days prior to the expiration
of the then-current term; provided, however, that after such termination for so
long as the Sub-Administrator, with the written consent of the Administrator, in
fact continues to perform any one or more of the services contemplated by this
Agreement or any schedule or exhibit hereto, the provisions of this Agreement,
including without limitation the provisions dealing with indemnification, shall
continue in full force and effect. This Agreement shall terminate automatically
upon termination of the Administration Agreement. In addition, either party to
this Agreement may terminate such Agreement prior to the expiration of the
initial term set forth above by providing the other party with written notice of
such termination at least 60 days prior to the date upon which such termination
shall become effective. Compensation due the Sub-Administrator and unpaid by the
Administrator upon such termination shall be immediately due and payable upon
and notwithstanding such termination. The Sub-Administrator shall be entitled to
collect from the Administrator, in addition to the compensation described under
paragraph 2 hereof, the amount of all the Sub-Administrator's cash disbursements
for services in connection with the Sub-Administrator's activities in effecting
such termination, including without limitation, the delivery to the
Administrator, the Trust, and/or their respective designees, of the Trust's
property, records, instruments and documents, or any copies thereof. Subsequent
to such termination for a reasonable fee to be paid by the Administrator, the
Sub-Administrator will provide the Administrator and/or the Trust with
reasonable access to any Trust documents or records remaining in its possession.
5. Standard of Care; Reliance on Records and Instructions;
Indemnification. The Sub- Administrator shall use reasonable efforts to ensure
the accuracy of all services performed under this Agreement, but shall not be
liable to the Administrator or the trust for any action taken or omitted by the
Sub-Administrator in the absence of bad faith, willful misfeasance, negligence
or from reckless disregard by it of its obligations and duties. The
Administrator agrees to indemnify and hold harmless the Sub-Administrator, its
affiliates, employees, agents, directors, officers and nominees from and against
any and all claims, demands, actions and suits, whether groundless or otherwise,
and from and against any and all judgements, liabilities, losses, damages,
costs, charges, counsel fees and other reasonable expenses of every nature and
character arising out of or in any way relating to
3
<PAGE>
the Sub-Administrator's actions taken or nonactions with respect to the
performance of services under this Agreement with respect to a Fund or based, if
applicable, upon reasonable reliance on information, records, instructions or
requests with respect to such Fund given or made to the Sub- Administrator by
the Administrator; provided that this indemnification shall not apply to actions
or omissions of the Sub-Administrator in cases of its own bad faith, willful
misfeasance, negligence or from reckless disregard by it of its obligations and
duties, and further provided that prior to confessing any claim against it which
may be the subject of this indemnification, the Sub- Administrator shall give
the Administrator written notice of and reasonable opportunity to defend against
said claim in its own name or in the name of the Sub-Administrator.
The Sub-Administrator agrees to indemnify and hold harmless the
Administrator, its employees, agents, directors, officers and nominees from and
against any and all claims, demands, actions and suits, whether groundless or
otherwise, and from and against any and all judgements, liabilities, losses,
damages, costs, charges, counsel fees and other reasonable expenses of every
nature and character arising out of or in any way relating to the
Sub-Administrator's bad faith, willful misfeasance, negligence or from reckless
disregard by it of its obligations and duties, with respect to the performance
of services under this Agreement, provided that prior to confessing any claim
against it which may be the subject of this indemnification, the Administrator
shall give the Sub- Administrator written notice of and reasonable opportunity
to defend against said claim in its own name or in the name of the
Administrator.
6. Record Retention and Confidentiality. The Sub-Administrator shall
keep and maintain on behalf of the Trust all books and records that the Trust
and the Sub-Administrator are, or may be, required to keep and maintain in
connection with the services to be provided hereunder pursuant to any applicable
statutes, rules and regulations, including without limitation Rules 31a-1 and
31a-2 under the Investment Company Act of 1940, as amended. The
Sub-Administrator further agrees that all such books and records shall be the
property of the Trust and to make such books and records available for
inspection by the Trust, by the Administrator, or by the Securities and Exchange
Commission at reasonable times.
7. Uncontrollable Events. The Sub-Administrator assumes no
responsibility hereunder, and shall not be liable, for any damage, loss of data,
delay or any other loss whatsoever caused by events beyond its reasonable
control.
8. Rights of Ownership. All computer programs and procedures developed
to perform the services to be provided by the Sub-Administrator under this
Agreement are the property of the Sub-Administrator. All records and other data
except such computer programs and procedures are the exclusive property of the
Trust and all such other records and data will be furnished to the Administrator
and/or the Trust in appropriate form as soon as practicable after termination of
this Agreement for any reason.
4
<PAGE>
9. Return of Records. The Sub-Administrator may at its option at any
time, and shall promptly upon the demand of the Administrator and/or the Trust,
turn over to the Administrator and/or the Trust and cease to retain the
Sub-Administrator's files, records and documents created and maintained by the
Sub-Administrator pursuant to this Agreement which are no longer needed by the
Sub-Administrator in the performance of its services or for its legal
protection. If not so turned over to the Administrator and/or the Trust, such
documents and records will be retained by the Sub- Administrator for six years
from the year of creation. At the end of such six-year period, such records and
documents will be turned over to the Administrator and/or the Trust unless the
Trust authorizes in writing the destruction of such records and documents.
10. Notices. Any notice provided hereunder shall be sufficiently given
when sent by registered or certified mail to the address set forth above, or at
such other address as either party may from time to time specify in writing to
the other party pursuant to this Section.
11. Headings. Paragraph headings in this Agreement are included for
convenience only and are not to be used to construe or interpret this Agreement.
12. Assignment. This agreement and the rights and duties hereunder
shall not be assignable with respect to a Fund by either of the parties hereto
except by the specific written consent of the other party and with the specific
written consent of the Trust.
13. Governing Law. This Agreement shall be governed by and provisions
shall be construed in accordance with the laws of the State of Ohio.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
BISYS FUND SERVICES KEY ASSET MANAGEMENT INC.
LIMITED PARTNERSHIP
By: BISYS Fund Services, Inc.,
General Partner
By: /s/ George O. Martinez By: /s/ Kathleen A. Dennis
------------------------------- -------------------------------
Title: Senior Vice President Title: Senior Managing Director
---------------------------- ----------------------------
Date: 11/4/97 Date: 11/3/97
----------------------------- -----------------------------
5
<PAGE>
SCHEDULE A
TO THE
SUB-ADMINISTRATION AGREEMENT
BETWEEN
BISYS FUND SERVICES LIMITED PARTNERSHIP
AND
KEY ASSET MANAGEMENT INC.
Funds
Balanced Fund Financial Reserves Fund
Diversified Stock Fund Fund for Income
Government Mortgage Fund Institutional Money Market Fund
Growth Fund National Municipal Bond Fund
Intermediate Income Fund New York Tax-Free Fund
International Growth Fund Ohio Municipal Money Market Fund
Investment Quality Bond Fund Lakefront Fund
Limited Term Income Fund Real Estate Investment Fund
Ohio Municipal Bond Fund
Ohio Regional Stock Fund
Prime Obligations Fund
Special Growth Fund
Special Value Fund
Stock Index Fund
Tax-Free Money Market Fund
U.S. Government Obligations Fund
Value Fund
BISYS FUND SERVICES KEY ASSET MANAGEMENT INC.
LIMITED PARTNERSHIP
By: BISYS Fund Services, Inc.,
General Partner
By: /s/ George O. Martinez By: /s/ Kathleen A. Dennis
----------------------------- -------------------------------
Title: Senior Vice President Title: Senior Managing Director
-------------------------- --------------------------
Date: 11/4/97 Date: 11/3/97
--------------------------- ---------------------------
6
<PAGE>
SCHEDULE A
TO THE
SUB-ADMINISTRATION AGREEMENT
BETWEEN
BISYS FUND SERVICES LIMITED PARTNERSHIP
AND
KEY ASSET MANAGEMENT INC.
Amended as of March 2, 1998
Funds
1. Balanced Fund 18. Financial Reserves Fund
2. Diversified Stock Fund 19. Fund for Income
3. Government Mortgage Fund 20. Institutional Money Market Fund
4. Growth Fund 21. National Municipal Bond Fund
5. Intermediate Income Fund 22. New York Tax-Free Fund
6. International Growth Fund 23. Ohio Municipal Money Market Fund
7. Investment Quality Bond Fund 24. Lakefront Fund
8. Limited Term Income Fund 25. Real Estate Investment Fund
9. Ohio Municipal Bond Fund 26. Federal Money Market Fund
10. Ohio Regional Stock Fund 27. Convertible Securities Fund
11. Prime Obligations Fund
12. Special Growth Fund
13. Special Value Fund
14. Stock Index Fund
15. Tax-Free Money Market Fund
16. U.S. Government Obligations Fund
17. Value Fund
<PAGE>
SCHEDULE A
TO THE
SUB-ADMINISTRATION AGREEMENT
BETWEEN
BISYS FUND SERVICES LIMITED PARTNERSHIP
AND
KEY ASSET MANAGEMENT INC.
AMENDED AS OF MAY 29, 1998
Funds
1.Balanced Fund 18. Financial Reserves Fund
2.Diversified Stock Fund 19. Fund for Income
3.Government Mortgage Fund 20. Institutional Money Market
4.Growth Fund Fund
5.Intermediate Income Fund 21. National Municipal Bond
6.International Growth Fund Fund
7.Investment Quality Bond Fund 22. New York Tax-Free Fund
8.Limited Term Income Fund 23. Ohio Municiapl Money
9.Ohio Municipal Bond Fund Market Fund
10.Ohio Regional Stock Fund 24. Lakefront Fund
11.Prime Obligations Fund 25. Real Estate Investment Fund
12.Special Growth Fund 26. Federal Money Market Fund
13.Special Value Fund 27. Convertible Securities Fund
14.Stock Index Fund 28. Maine Municipal Bond Fund
15.Tax-Free Money Market Fund (Intermediate)
16.U.S. Government Obligations 29. Maine Municipal Bond Fund
Fund (Short-Intermediate)
17.Value Fund 30. Michigan Municipal Bond
Fund
31. Equity Income Fund
32. National Municipal Bond
Fund (Long)
32. National Municipal Bond
Fund (Short-Intermediate)
TRANSFER AGENCY AND SERVICE AGREEMENT
between
The Victory Portfolios
on Behalf of Various Funds
Listed on Schedule A
Individually and Not Jointly
and
STATE STREET BANK AND TRUST COMPANY
<PAGE>
TABLE OF CONTENTS
Page
----
Article 1 Terms of Appointment; Duties of the Bank......................
Article 2 Fees and Expenses.............................................
Article 3 Representations and Warranties of the Bank....................
Article 4 Representations and Warranties of the Company.................
Article 5 Data Access and Proprietary Information.......................
Article 6 Indemnification...............................................
Article 7 Standard of Care..............................................
Article 8 Covenants of the Company and the Bank.........................
Article 9 Termination of Agreement......................................
Article 10 Assignment....................................................
Article 11 Amendment.....................................................
Article 12 Massachusetts Law to Apply....................................
Article 13 Force Majeure.................................................
Article 14 Consequential Damages.........................................
Article 15 Merger of Agreement...........................................
Article 16 Counterparts..................................................
Article 17 Multiple Funds................................................
Article 18 Limitation of Liability.......................................
Article 19 Arbitration...................................................
<PAGE>
TRANSFER AGENCY AND SERVICE AGREEMENT
-------------------------------------
AGREEMENT made as of the 12th day of July, 1996 by and between THE VICTORY
PORTFOLIOS, a Delaware business trust, having its principal office and place of
business at 3435 Stelzer Road, Columbus, Ohio (the "Company"), on behalf of the
individual Funds listed on Schedule A, individually and not jointly, (each a
"Fund" and collectively, the "Funds"), and STATE STREET BANK AND TRUST COMPANY,
a Massachusetts trust company having its principal office and place of business
at 225 Franklin Street, Boston, Massachusetts 02110 ("the Bank").
WHEREAS, the Company is a series Fund registered as an investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
and
WHEREAS, the Fund desires to appoint the Bank as its transfer agent,
dividend disbursing agent, custodian of certain retirement plans and agent in
connection with certain other activities, and the Bank desires to accept such
appointment;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
Article 1 Terms of Appointment; Duties of the Bank
----------------------------------------
1.01 Subject to the terms and conditions set forth in this Agreement,
the Company, on behalf of each Fund, individually
- 1 -
<PAGE>
and not jointly, hereby employs and appoints the Bank to act as, and the Bank
agrees to act as its transfer agent for the Fund's authorized and issued shares
of beneficial interest, (the "Shares"), dividend disbursing agent, custodian of
certain retirement plans and agent in connection with any accumulation,
open-account or similar plans provided to the shareholders of each Fund (the
"Shareholders") and set out in the currently effective prospectus and statement
of additional information ("prospectus") of each Fund, including without
limitation any periodic investment plan or periodic withdrawal program.
1.02 The Bank agrees that it will perform the following services:
(a) In accordance with procedures established from time to time by
agreement between the Company and the Bank, the Bank shall:
(i) Receive for acceptance, orders for the purchase of Shares,
and promptly deliver payment and appropriate documentation
thereof to the Custodian of each Fund authorized pursuant to
the Trust Instrument of the Company (the "Custodian");
(ii) Pursuant to purchase orders, issue the appropriate number of
Shares and hold such Shares in the appropriate Shareholder
account;
- 2 -
<PAGE>
(iii) Receive for acceptance redemption requests and redemp tion
directions and deliver the appropriate documentation thereof
to the Custodian;
(iv) In respect to the transactions in items (i), (ii) and (iii)
above, the Bank shall execute transactions directly with
broker-dealers authorized by each Fund who shall thereby be
deemed to be acting on behalf of the Fund;
(v) At the appropriate time as and when it receives monies paid
to it by the Custodian with respect to any redemption, pay
over or cause to be paid over in the appropriate manner such
monies as instructed by the redeeming Shareholders;
(vi) Effect transfers of Shares by the registered owners thereof
upon receipt of appropriate instructions;
(vii) Prepare and transmit payments for dividends and
distributions declared by each Fund;
(viii) Issue replacement certificates for those certificates
alleged to have been lost, stolen or destroyed upon receipt
by the Bank of indemnification satisfactory to the Bank and
protecting the Bank and the Funds, and the Bank at its
option, may issue replacement certificates in place of
mutilated stock certificates upon presentation thereof and
without such indemnity;
(ix) Maintain records of account for and advise each Fund and its
shareholders as to the foregoing; and
- 3 -
<PAGE>
(x) Record the issuance of shares of each Fund and maintain
pursuant to SEC Rule 17Ad-10(e) a record of the total number
of shares of the Funds that are authorized, based upon data
provided to it by the Funds, and issued and outstanding. The
Bank shall also provide each Fund on a regular basis with
the total number of shares which are authorized and issued
and outstanding and shall have no obligation, when recording
the issuance of shares, to monitor the issuance of such
shares or to take cognizance of any laws relating to the
issue or sale of such shares, which functions shall be the
sole responsibility of the Funds.
(b) In addition to and neither in lieu nor in contravention of the
services set forth in the above paragraph (a), the Bank shall: (i) perform the
customary services of a transfer agent, dividend disbursing agent, custodian of
certain retirement plans and, as relevant, agent in connection with
accumulation, openaccount or similar plans (including without limitation any
periodic investment plan or periodic withdrawal program), including but not
limited to: maintaining all Shareholder accounts, preparing Shareholder meeting
lists, mailing proxies, mailing Shareholder reports and prospectuses to current
Shareholders, withholding taxes on U.S. resident and non-resident alien
accounts, preparing and filing U.S. Treasury Department Forms 1099 and other
appropriate forms required with respect to dividends and distributions by
federal authorities for all Shareholders, preparing and mailing
- 4 -
<PAGE>
confirmation forms and statements of account to Shareholders for all purchases
and redemptions of Shares and other confirmable transactions in Shareholder
accounts, preparing and mailing activity statements for Shareholders, and
providing Shareholder account information and (ii) provide a system which will
enable the Fund to monitor the total number of Shares sold in each State.
(c) In addition, the Funds shall (i) identify to the Bank in writing
those transactions and assets to be treated as exempt from blue sky reporting
for each State and (ii) verify the establishment of transactions for each State
on the system prior to activation and thereafter monitor the daily activity for
each State.
(d) Procedures as to who shall provide certain of these services in
Article 1 may be established from time to time by agreement between the Company
and the Bank per the attached service responsibility schedule, established and
amended from time to time by written agreement between the Company, on behalf of
each affected Fund, and the Bank. By agreement, the Bank may at times perform
only a portion of these services and the Funds or their agent may perform these
services on the Funds' behalf.
(e) The Bank shall provide additional services on behalf of each Fund
(i.e., escheatment services) that may be agreed upon in writing between the
Company and the Bank.
(f) The Bank will not accept third-party checks in payment of the
Shares.
- 5 -
<PAGE>
Article 2 Fees and Expenses
-----------------
2.01 For the performance by the Bank pursuant to this Agreement, each
Fund agrees to pay the Bank an annual maintenance fee for each shareholder
account as set out in the initial fee schedule attached hereto. Such fees and
out-of-pocket expenses and advances identified under Section 2.02 below may be
changed from time to time subject to mutual written agreement between the
Company and the Bank.
2.02 In addition to the fee paid under Section 2.01 above, each Fund
agrees to reimburse the Bank for out-of-pocket expenses, including but not
limited to confirmation production, postage, forms, telephone, microfilm,
microfiche, tabulation proxies, records storage, or advances incurred by the
Bank for the items set out in the fee schedule attached hereto. In addition, any
other expenses incurred by the Bank at the request or with the consent of the
Company will be reimbursed by the affected Fund. The parties agree that the
initial fee schedule attached hereto will remain in effect for at least two
years from the effective date of this Agreement.
2.03 Each Fund agrees to pay all fees and reimbursable expenses within
30 days following the receipt of the respective billing notice. Postage for
mailing of dividends, proxies, Fund reports and other mailings to all
shareholder accounts shall be advanced to the Bank by the Fund at least seven
(7) days prior to the mailing date of such materials.
- 6 -
<PAGE>
Article 3 Representations and Warranties of the Bank
------------------------------------------
The Bank represents and warrants to the Fund that:
3.01 It is a trust company duly organized and existing and in good
standing under the laws of the Commonwealth of Massachusetts.
3.02 It is duly qualified to carry on its business in the Commonwealth
of Massachusetts.
3.03 It is empowered under applicable laws and by its Charter and
By-Laws to enter into and perform this Agreement.
3.04 All requisite corporate proceedings have been taken to authorize
it to enter into and perform this Agreement.
3.05 It and any sub-transfer agent has and will continue to have access
to the necessary facilities, equipment and personnel to perform its duties and
obligations under this Agreement.
3.06 It and any sub-transfer agent has and will continue to be
registered as a transfer agent with the appropriate regulatory agency and to the
extent necessary with any appropriate state regulator.
- 7 -
<PAGE>
Article 4 Representations and Warranties of the Company
---------------------------------------------
The Company represents and warrants to the Bank that:
4.01 It is a business trust duly organized and existing and in good
standing under the laws of the State of Delaware.
4.02 It is empowered under applicable laws and by its Trust Instrument
and By-Laws to enter into and perform this Agreement.
4.03 All corporate proceedings required by the Trust Instrument and
By-Laws have been taken to authorize it to enter into and perform this
Agreement.
4.04 It is an open-end, management investment company registered under
the Investment Company Act of 1940, as amended.
4.05 A registration statement under the Securities Act of 1933, as
amended is currently effective and will remain effective, and appropriate state
securities law filings have been made and will continue to be made, with respect
to all Shares of each Fund being offered for sale.
Article 5 Data Access and Proprietary Information
---------------------------------------
5.01 Each Fund acknowledges that the data bases, computer programs,
screen formats, report formats, interactive design techniques, and documentation
manuals furnished to each Fund by the
- 8 -
<PAGE>
Bank as part of the Funds' ability to access certain Fund-related data
("Customer Data") maintained by the Bank on data bases under the control and
ownership of the Bank or other third party ("Data Access Services") constitute
copyrighted, trade secret, or other proprietary information
(collectively,"Proprietary Information") of substantial value to the Bank or
other third party. In no event shall Proprietary Information be deemed Customer
Data. Each Fund agrees to treat all Proprietary Information as proprietary to
the Bank and further agrees that it shall not divulge any Proprietary
Information to any person or organization except as may be provided hereunder.
Without limiting the foregoing, each Fund agrees for itself and its employees
and agents:
(a) to access Customer Data solely from locations as may be designated
in writing by the Bank and solely in accordance with the Bank's applicable user
documentation;
(b) to refrain from copying or duplicating in any way the Proprietary
Information;
(c) to refrain from obtaining unauthorized access to any portion of the
Proprietary Information, and if such access is inadvertently obtained, to inform
in a timely manner of such fact and dispose of such information in accordance
with the Bank's instructions;
(d) to refrain from causing or allowing third-party
- 9 -
<PAGE>
data acquired hereunder from being retransmitted to any other computer facility
or other location, except with the prior written consent of the Bank;
(e) that each Fund shall have access only to those authorized
transactions agreed upon by the parties;
(f) to honor all reasonable written requests made by the Bank to
protect at the Bank's expense the rights of the Bank in Proprietary Information
at common law, under federal copyright law and under other federal or state law.
Each party shall take reasonable efforts to advise its employees of
their obligations pursuant to this Article 5. The obligations of this Article
shall survive any earlier termination of this Agreement.
5.02 If the Company notifies the Bank that any of the Data Access
Services do not operate in material compliance with the most recently issued
user documentation for such services, the Bank shall endeavor in a timely manner
to correct such failure. Organizations from which the Bank may obtain certain
data included in the Data Access Services are solely responsible for the
contents of such data and each Fund agrees to make no claim against the Bank
arising out of the contents of such third-party data, including, but not limited
to, the accuracy thereof. DATA ACCESS SERVICES AND ALL COMPUTER PROGRAMS AND
SOFTWARE SPECIFICATIONS USED IN CONNECTION THEREWITH
- 10 -
<PAGE>
ARE PROVIDED ON AN AS IS, AS AVAILABLE BASIS. THE BANK EXPRESSLY DISCLAIMS ALL
WARRANTIES EXCEPT THOSE EXPRESSLY STATED HEREIN INCLUDING, BUT NOT LIMITED TO,
THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
5.03 If the transactions available to the Funds include the ability to
originate electronic instructions to the Bank in order to (i) effect the
transfer or movement of cash or Shares or (ii) transmit Shareholder information
or other information (such transactions constituting a "COEFI"), then in such
event the Bank shall be entitled to rely on the validity and authenticity of
such instruction without undertaking any further inquiry as long as such
instruction is undertaken in conformity with security procedures established by
the Bank from time to time.
Article 6 Indemnification
---------------
6.01 The Bank shall not be responsible for, and each Fund, individually
and not jointly, shall indemnify and hold the Bank harmless from and against,
any and all losses, damages, costs, charges, counsel fees, payments, expenses
and liability arising out of or attributable to:
(a) All actions of the Bank or its agent or subcontractors required to
be taken pursuant to this Agreement, provided that such actions are taken in
good faith and without negligence or willful misconduct.
- 11 -
<PAGE>
(b) The Fund's lack of good faith, negligence or willful misconduct
which arise out of the breach of any representation or warranty of the Fund
hereunder.
(c) The reliance on or use by the Bank or its agents or subcontractors
of information, records, documents or services which (i) are received by the
Bank or its agents or subcontractors, and (ii) have been prepared, maintained or
performed by the Fund or any other person or firm on behalf of the Fund
including but not limited to any previous transfer agent or registrar.
(d) The reliance on, or the carrying out by the Bank or its agents or
subcontractors of any instructions or requests of the Fund.
(e) The offer or sale of Shares in violation of any requirement under
the federal securities laws or regulations or the securities laws or regulations
of any state that such Shares be registered in such state or in violation of any
stop order or other determination or ruling by any federal agency or any state
with respect to the offer or sale of such Shares in such state.
6.02 At any time the Bank may apply to any officer of the Company for
instructions, and may consult with legal counsel with respect to any matter
arising in connection with the services to be performed by the Bank under this
Agreement, and the Bank and its agents or subcontractors shall not be liable and
shall be
- 12 -
<PAGE>
indemnified by each Fund, individually and not jointly, for any action taken or
omitted by it in reliance upon such instructions or upon the opinion of such
counsel. The Bank, its agents and subcontractors shall be protected and
indemnified in acting upon any paper or document furnished by or on behalf of a
Fund, reasonably believed to be genuine and to have been signed by the proper
person or persons, or upon any instruction information, data, records or
documents provided the Bank or its agents or subcontractors by machine readable
input, telex, CRT data entry or other similar means authorized by the Fund, and
shall not be held to have notice of any change of authority of any person, until
receipt of written notice thereof from the Fund. The Bank, its agents and
subcontractors shall also be protected and indemnified in recognizing stock
certificates which are reasonably believed to bear the proper manual or
facsimile signatures of the officers of the Company, and the proper
countersignature of any former transfer agent or former registrar, or of a
co-transfer agent or co-registrar.
6.03 In order that the indemnification provisions contained in this
Article 6 shall apply, upon the assertion of a claim for which a Fund may be
required to indemnify the Bank, the Bank shall promptly notify the Fund of such
assertion, and shall keep the Fund advised with respect to all developments
concerning such claim. The Fund shall have the option to participate with the
Bank in the defense of such claim or to defend against said claim in its own
name or in the name of the Bank. The Bank shall in no case confess any claim or
make any compromise in any case in which a Fund
- 13 -
<PAGE>
may be required to indemnify the Bank except with the Fund's prior written
consent.
Article 7 Standard of Care
----------------
7.01 The Bank shall at all times act in good faith and agrees to use
its best efforts within reasonable limits to insure the accuracy of all services
performed under this Agreement, but assumes no responsibility and shall not be
liable for loss or damage due to errors unless said errors are caused by its
negligence, bad faith, or willful misconduct of that of its employees.
Article 8 Covenants of the Company and the Bank
-------------------------------------
8.01 The Company shall promptly furnish to the Bank the following:
(a) A certified copy of the resolution of the Board of Trustees of the
Company authorizing the appointment of the Bank and the execution and delivery
of this Agreement.
(b) A copy of the Trust Instrument and By-Laws of the Fund and all
amendments thereto.
8.02 The Bank hereby agrees to establish and maintain facilities and
procedures reasonably acceptable to the Fund for safekeeping of stock
certificates, check forms and facsimile
- 14 -
<PAGE>
signature imprinting devices, if any; and for the preparation or use, and for
keeping account of, such certificates, forms and devices.
8.03 The Bank shall keep records relating to the services to be
performed hereunder, in the form and manner as it may deem advisable. To the
extent required by Section 17A of the Securities Exchange Act of 1934, as
amended, Section 31 of the 1940 Act, and the Rules thereunder, the Bank agrees
that all such records prepared or maintained by the Bank relating to the
services to be performed by the Bank hereunder are the property of each Fund and
will be preserved, maintained and made available in accordance with such
Sections and Rules, and will be surrendered promptly to the Funds on and in
accordance with their request.
8.04 The Bank and the Company agree that all books, records,
information and data pertaining to the business of the other party which are
exchanged or received pursuant to the negotiation or the carrying out of this
Agreement shall remain confidential, and shall not be voluntarily disclosed to
any other person, except as may be required by law.
8.05 In case of any requests or demands for the inspection of the
Shareholder records of a Fund, the Bank will endeavor to notify the Fund and to
secure instructions from an authorized officer of the Company as to such
inspection. The Bank reserves the right, however, to exhibit the Shareholder
records to
- 15 -
<PAGE>
any person whenever it is advised by its counsel that it may be held liable for
the failure to exhibit the Shareholder records to such person.
Article 9 Termination of Agreement
------------------------
9.01 During the initial two year term of this Agreement, this Agreement
may be terminated by either party only for "cause" upon one hundred twenty (120)
days written notice to the other.
9.02 After the initial two year term of this Agreement, either party
may terminate this Agreement upon 120 days notice for any reason or for no
reason.
9.03 Should the Company exercise its right to terminate, all
out-of-pocket expenses associated with the movement of records and material with
respect to each Fund will be borne by each Fund individually and not jointly.
Additionally, the Bank reserves the right to charge for any other reasonable
expenses associated with such termination and/or a charge equivalent to the
average of three (3) months' fees, provided that the Agreement has not been
terminated by the Company for "cause" (as defined in section 9.04 below).
9.04 For purposes of this Agreement, "cause" shall mean (a) a material
breach of the terms of this Agreement; (b) the failure of the Bank to meet the
performance standards set forth on the attached schedule; (c) the material
breach of a warranty,
- 16 -
<PAGE>
representation or covenant contained in this Agreement; (d) the failure to meet
the standard of care set forth in Article 7 of this Agreement; (e) an
"assignment" (as defined in the 1940 Act) of this Agreement by the Bank. For
purposes of this Section 9.04 and Section 10.01 below, an "assignment" of the
Sub-Transfer Agent Agreement (as defined below) will considered an assignment of
this Agreement.
Article 10 Assignment
----------
10.01 Neither this Agreement nor any rights or obligations hereunder
may be "assigned" (as defined in the 1940 Act) or delegated by either party
without the written consent of the other party.
10.02 This Agreement shall inure to the benefit of and be binding upon
the parties and their respective permitted successors and assigns.
10.03 The Bank will, without further consent on the part of the
Company, enter into an agreement for the performance of the some or all of the
Bank's obligations set forth in this Agreement (the "Sub-Transfer Agent
Agreement") with Boston Financial Data Services, Inc. ("BFDS"), a Massachusetts
Corporation Agreement"), which is duly registered as a transfer agent pursuant
to Section 17A(c)(2) of the Securities Exchange Act of 1934, as amended
("Section 17A(c)(2)"); provided, however, that the Bank will
- 17 -
<PAGE>
be as fully responsible to the Company for the acts and omissions of BFDS as it
is for its own acts and omissions.
Article 11 Amendment
---------
11.01 This Agreement may be amended or modified by a written agreement
executed by both parties and authorized or approved by a resolution of the Board
of Trustees of the Company.
Article 12 Massachusetts Law to Apply
--------------------------
12.01 This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of the Commonwealth of
Massachusetts.
Article 13 Force Majeure
-------------
13.01 In the event either party is unable to perform its obligations
under the terms of this Agreement because of acts of God, strikes, equipment or
transmission failure or damage reasonably beyond its control, or other causes
reasonably beyond its control, such party shall not be liable for damages to the
other for any damages resulting from such failure to perform or otherwise from
such causes. The Bank warrants and represents that it has disaster recovery
facilities that are designed to reasonably assure that its operations with
respect to the Company and its shareholders will continue uninterrupted. The
Bank further warrants and represents
- 18 -
<PAGE>
that it has in place disaster recovery procedures and that such procedures are
periodically reviewed and tested.
Article 14 Consequential Damages
---------------------
14.01 Neither party to this Agreement shall be liable to the other
party for consequential damages under any provision of this Agreement or for any
consequential damages arising out of any act or failure to act hereunder.
Article 15 Merger of Agreement
-------------------
15.01 This Agreement constitutes the entire agreement between the
parties hereto and supersedes any prior agreement with respect to the subject
matter hereof whether oral or written.
Article 16 Counterparts
------------
16.01 This Agreement may be executed by the parties hereto on any
number of counterparts, and all of said counterparts taken together shall be
deemed to constitute one and the same instrument.
Article 17 Multiple Funds
--------------
17.01 Every reference to a Fund shall be deemed a reference solely to
the particular Fund of the Company (as set forth in Schedule A, as may be
amended from time to time). Under no circumstances shall the rights, obligations
or remedies with respect to a particular Fund constitute a right, obligation or
remedy applicable to any other Fund. In particular, and without otherwise
- 19 -
<PAGE>
limiting the scope of this paragraph, the Bank shall have no right to set off
claims of a Fund by applying property of any other Fund.
Article 18 Limitation on Liability
-----------------------
Copies of the Trust Instrument, as amended, establishing the Company
are on file with the Secretary of the Trust, and notice is hereby given that
this Agreement is executed on behalf of the Company by officers of the Company
as officers and not individually and that the obligations of or arising out of
this Agreement are not binding upon any of the Trustees, officers, shareholders,
employees or agents of the Company but are binding only upon the assets and
property of the various Funds of the Company, severally and not jointly.
Article 19 Arbitration
-----------
19.01 Any controversy, claim, or dispute arising out of or relating to
this Agreement or the Sub-Transfer Agent Agreement, or any breach thereof,
including without limitation any dispute concerning the scope of this Article
19, will be settled by arbitration in accordance with the Commercial Arbitration
Rules of the American Arbitration Association as supplemented herein, and
judgment upon the award rendered by the arbitrator(s) may be entered in any
court having jurisdiction thereof.
19.02 There will be three arbitrators, including at least one
practicing attorney and one certified public accountant.
- 20 -
<PAGE>
Pending final award, arbitrator compensation and expenses will be advanced
equally by both parties.
19.03 The AAA will hold an administrative conference with counsel for
the parties within 20 days after the filing of the demand for arbitration. The
parties and the AAA will thereafter cooperate in order to complete the
appointment of three arbitrators as quickly as possible. Within 15 days after
all three arbitrators have been appointed, an initial meeting among the
arbitrators and counsel for the parties will be held for the purpose of
establishing a plan for administration of the arbitration, including:
(a) defining the issues;
(b) scope, timing, and types of discovery, which may at the discretion
of the arbitrators include production of documents in the possession of the
parties, but may not without consent of all particles include depositions;
(c) exchange of documents and filing of detailed statement of claim and
prehearing memoranda;
(d) schedule and place of hearings; and
(e) any other matters that may promote the efficient, expeditious, and
cost-effective conduct of the proceeding.
19.04 The arbitration will take place in the State of Ohio.
19.05 The final award will include pre-award interest at a rate of
interest determined by the arbitrators to approximate
- 21 -
<PAGE>
the cost to he prevailing party of borrowing money during the relevant period.
19.06 The final award may grant such other, further and different
relief as authorized by the American Arbitration Association Commercial
Arbitration Rules, which may not include punitive damages.
- 22 -
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf by and through their duly authorized
officers, as of the day and year first above written.
THE VICTORY PORTFOLIOS, on behalf of
each of the Funds listed on Schedule
A, individually and not jointly
By:/s/William B. Blundin
----------------------
Vice President
ATTEST:
/s/Scott A. Englehart
- -----------------------------
Secretary
STATE STREET BANK AND TRUST COMPANY
BY:/s/Ronald E. Logue
------------------
Executive Vice President
ATTEST:
/s/Stephen Cesso
- -----------------------------
Vice President
- 23 -
<PAGE>
SCHEDULE A
Amended as of May 29, 1998
<TABLE>
<S> <C>
1. Victory Balanced Fund 26.Victory Federal Money Market Fund
Class A Shares Investor Shares
Class B Shares Select Shares
2. Victory Diversified Stock Fund 27.Victory Convertible Securities Fund
Class A Shares 28.Victory LifeChoice Conservative Investor Fund
Class B Shares 29.Victory LifeChoice Growth Investor Fund
3. Victory Government Mortgage Fund 30.Victory LifeChoice Moderate Investor Fund
4. Victory Growth Fund 31.Victory Maine Municipal Bond Fund (Intermediate)
5. Victory Financial Reserves Fund 32.Victory Maine Municipal Bond Fund (Short-
6. Victory Fund for Income Intermediate)
7. Victory Institutional Money Market Fund 33.Victory Michigan Municipal Bond Fund
Investor Shares 34.Victory Equity Income Fund
Select Shares 35.Victory National Municipal Bond Fund (Long)
8. Victory Intermediate Income Fund 36.Victory National Municipal Bond Fund
9. Victory International Growth Fund (Short-Intermediate)
Class A Shares
Class B Shares
10.Victory Investment Quality Bond Fund
11.Victory Lakefront Fund
12.Victory Limited Term Income Fund
13.Victory National Municipal Bond Fund
Class A Shares
Class B Shares
14.Victory New York Tax-Free Fund
Class A Shares
Class B Shares
15.Victory Ohio Municipal Bond Fund
16.Victory Ohio Municipal Money Market
Fund
17.Victory Ohio Regional Stock Fund
Class A Shares
Class B Shares
18.Victory Prime Obligations Fund
19.Victory Real Estate Investment Fund
20.Victory Special Growth Fund
21.Victory Special Value Fund
Class A Shares
Class B Shares
22.Victory Stock Index Fund
23.Victory Tax-Free Money Market Fund
24.Victory U.S. Government Obligations Fund
Investor Shares
Select Shares
25.Victory Value Fund
</TABLE>
<PAGE>
SCHEDULE I
Amended as of March 2, 1998
- --------------------------------------------------------------------------------
1. Victory Balanced Fund 26. Victory Federal Money Market Fund
Class A Shares Investor Shares
Class B Shares Select Shares
Key Shares 27. Victory Convertible Securities Fund
2. Victory Diversified Stock Fund 28. Victory LifeChoice Conservative
Class A Shares Investor Fund
Class B Shares 29. Victory LifeChoice Growth
3. Victory Government Mortgage Fund Investor Fund
4. Victory Growth Fund 30. Victory LifeChoice Moderate
5. Victory Financial Reserves Fund Investor Fund
6. Victory Fund for Income
7. Victory Institutional Money Market Fund
Investor Shares
Select Shares
8. Victory Intermediate Income Fund
9. Victory International Growth Fund
Class A Shares
Class B Shares
10. Victory Investment Quality Bond Fund
11. Victory Lakefront Fund
12. Victory Limited Term Income Fund
13. Victory National Municipal Bond Fund
Class A Shares
Class B Shares
14. Victory New York Tax-Free Fund
Class A Shares
Class B Shares
15. Victory Ohio Municipal Bond Fund
16. Victory Ohio Municipal Money Market Fund
17. Victory Ohio Regional Stock Fund
Class A Shares
Class B Shares
18. Victory Prime Obligations Fund
19. Victory Real Estate Investment Fund
20. Victory Special Growth Fund
21. Victory Special Value Fund
Class A Shares
Class B Shares
22. Victory Stock Index Fund
23. Victory Tax-Free Money Market Fund
24. Victory U.S. Government Obligations Fund
Investor Shares
Select Shares
25.Victory Value Fund
- --------------------------------------------------------------------------------
<PAGE>
SCHEDULE A
Amended as of March 1, 1997
1. Victory Balanced Fund
Class A Shares
Class B Shares
Key Shares
2. Victory Diversified Stock Fund
Class A Shares
Class B Shares
3. Victory Government Mortgage Fund
4. Victory Growth Fund
5. Victory Financial Reserves Fund
6. Victory Fund For Income
7. Victory Government Bond Fund
Class A Shares
Class B Shares
8. Victory Institutional Money Market Fund
Investor Shares
Select Shares
9. Victory Intermediate Income Fund
10. Victory International Growth Fund
Class A Shares
Class B Shares
11. Victory Investment Quality Bond Fund
12. Victory Limited Term Income Fund
13. Victory National Municipal Bond Fund
Class A Shares
Class B Shares
14. Victory New York Tax-Free Fund
Class A Shares
Class B Shares
15. Victory Ohio Municipal Bond Fund
16. Victory Ohio Municipal Money Market Fund
17. Victory Ohio Regional Stock Fund
Class A Shares
Class B Shares
18. Victory Prime Obligations Fund
19. Victory Special Growth Fund
20. Victory Special Value Fund
Class A Shares
Class B Shares
21. Victory Stock Index Fund
22. Victory Tax-Free Money Market
23. Victory U.S. Government Obligations Fund
Investor Class Shares
Select Class Shares
24. Victory Value Fund
25. Victory Lakefront Fund
26. Victory Real Estate Investment Fund
<PAGE>
SCHEDULE A
1. Victory Balanced Fund
Class A Shares
Class B Shares
Key Shares
2. Victory Diversified Stock Fund
Class A Shares
Class B Shares
3. Victory Government Mortgage Fund
4. Victory Growth Fund
5. Victory Financial Reserves Fund
6. Victory Fund For Income
7. Victory Government Bond Fund
Class A Shares
Class B Shares
8. Victory Institutional Money Market Fund
Investor Shares
Select Shares
9. Victory Intermediate Income Fund
10. Victory International Growth Fund
Class A Shares
Class B Shares
11. Victory Investment Quality Bond Fund
12. Victory Limited Term Income Fund
13. Victory National Municipal Bond Fund
Class A Shares
Class B Shares
14. Victory New York Tax-Free Fund
Class A Shares
Class B Shares
15. Victory Ohio Municipal Bond Fund
16. Victory Ohio Municipal Money Market Fund
17. Victory Ohio Regional Stock Fund
Class A Shares
Class B Shares
18. Victory Prime Obligations Fund
19. Victory Special Growth Fund
20. Victory Special Value Fund
Class A Shares
Class B Shares
21. Victory Stock Index Fund
22. Victory Tax-Free Money Market
23. Victory U.S. Government Obligations Fund
Investor Class Shares
Select Class Shares
24. Victory Value Fund
<PAGE>
STATE STREET BANK AND TRUST COMPANY
FUND SERVICE RESPONSIBILITIES*
Service Performed Responsibility
- ----------------- --------------
Bank Fund
---- ----
1. Receives orders for the purchase X X+
of Shares.
2. Issue shares and hold Shares in X
Shareholders accounts.
3. Receive redemption requests. X X+
4. Effect transactions 1-3 above X X+
directly with broker-dealers.
5. Pay over monies to redeeming X X+
Shareholders.
6. Effect transfers of Shares. X X+
7. Prepare and transmit dividends X X+
distributions.
8. Issue Replacement Certificates. X
9. Reporting of abandoned property. X
10. Maintain records of account. X
11. Maintain and keep a current and X
accurate control book for each
issue of securities
12. Mail proxies. X
13. Mail shareholder reports. X
14. Mail prospectuses to current X
Shareholders.
15. Withhold taxes on U.S. resident X
and non-resident alien accounts.
16. Prepare and file U.S. Treasury X
Department forms.
17. Prepare and mail account and X X+
confirmation statements for
Shareholders.
- 25 -
<PAGE>
Service Performed Responsibility
- ----------------- --------------
Bank Fund
---- ----
18. Provide Shareholder account X
information.
19. Blue sky reporting. X
* Such services are more fully described in Article 1.02 (a), (b)
and (c) of the Agreement.
+ Shared responsibility with each KeyCorp division responsible
for their customers represented by onmnibus accounts
THE VICTORY PORTFOLIOS, on behalf of
each of the Funds listed on Schedule
A, individually and not jointly
By:/s/William B. Blundin
----------------------
Vice President
ATTEST:
/s/Scott A. Englehart
- -----------------------------
Secretary
STATE STREET BANK AND TRUST COMPANY
BY:/s/Ronald E. Logue
------------------
Executive Vice President
ATTEST:
/s/Stephen Cesso
- -----------------------------
Vice President
- 26 -
<PAGE>
Fee Information for Services as
Plan, Transfer and Dividend Disbursing Agent
THE VICTORY PORTFOLIOS
- --------------------------------------------------------------------------------
Annual Account Service Fees
- ---------------------------
Account Fee $13.25
Complex Base Fee* $600,000
Closed Account Fee $ 1.50
Each class is considered a fund and will be billed accordingly.
Fees are billable on a monthly basis at the rate of 1/12 of the annual fee. A
charge is made for an account in the month that an account opens or closes.
Activity Based Fees
- -------------------
New Account Set-up $5.00/each
Manual Transactions $1.50/each
Telephone Calls $1.50/each
Correspondence $2.50/each
IRA Custodial Fees (If Applicable)
- ----------------------------------
Annual Maintenance $10.00/account
Conversion Fee
- --------------
One Time Fee $30,000
Out-of-Pocket Expenses Billed as incurred
Out-of-Pocket expenses include but are not limited to: confirmation statements,
postage, forms, audio response, telephone, records retention, transcripts,
microfilm, microfiche, and expenses incurred at the specific direction of the
fund.
*This complex base fee may be allocated across the Funds at the discretion of
KeyCorp. The complex base fee is applicable up to 50 Cusips.
THE VICTORY PORTFOLIOS, on behalf of
each of the Funds listed on Schedule A,
individually and not jointly STATE STREET BANK AND TRUST CO.
By /s/William B. Blundin By /s/Ronald E. Logue
--------------------- ------------------
Title Vice President Title Executive Vice President
Date July 22, 1996 Date July 26, 1996
- 27 -
FUND ACCOUNTING AGREEMENT
AGREEMENT made this 31st day of May, 1995 between THE VICTORY
PORTFOLIOS (the "Trust"), a Massachusetts business trust having its principal
place of business at 1900 East Dublin- Granville Road, Columbus, Ohio 43229, and
BISYS FUND SERVICES OHIO, INC. ("BISYS"), a corporation organized under the laws
of the State of Ohio and having its principal place of business at 1900 East
Dublin-Granville Road, Columbus, Ohio 43229.
WHEREAS, the Trust desires that BISYS perform certain fund accounting
services for each investment portfolio of the Trust identified on Schedule A
hereto (individually referred to herein as a "Fund" and collectively as the
"Funds"); and
WHEREAS, BISYS is willing to perform such services on the terms and
conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual premises and covenants
herein set forth, the parties agree as follows:
1. SERVICES AND FUND ACCOUNT. BISYS will keep and maintain the
following books and records of each Fund pursuant to Rule 31a-1 under the
Investment Company Act of 1940 (the "Rule"):
a. Journals containing an itemized daily record in detail of
all purchases and sales of securities, all receipts and disbursements of cash
and all other debits and credits, as required by subsection (b)(1) of the Rule;
b. General and auxiliary ledgers reflecting all asset,
liability, reserve, capital, income and expense accounts, including interest
accrued and interest received, as required by subsection (b)(2)(i) of the Rule;
c. Separate ledger accounts required by subsection (b)(2)(ii)
and (iii) of the Rule; and
d. A monthly trial balanced of all ledger accounts (except
shareholder accounts) as required by subsection (b)(8) of the Rule.
All such books and records shall be the property of the Trust, and BISYS agrees
to make such books and records available for inspection by the Trust or by the
Securities and Exchange commission at reasonable times and otherwise to keep
confidential all records and other information relative to the Trust; except
when requested to divulge such information by duly-constituted authorities or
court process, or when requested by the Trust.
<PAGE>
In addition to the maintenance of the books and records specified
above, BISYS shall perform the following account services daily for each Fund:
a. Calculate the net asset value per Share;
b. Calculate the dividend and capital gain distribution, if
any;
c. Calculate the yield;
d. Provide the following reports:
(i) a current security position report;
(ii) a summary report of transactions and pending maturities
(including the principal, cost, and accrued interest on
each portfolio security in maturity date order); and
(iii) a current cash position report (including cash
available from portfolio sales and maturities and sales
of a Fund's Shares less cash needed for redemptions and
settlement of portfolio purchases);
e. Such other similar services with respect to a Fund as may be
reasonable requested by the Trust.
2. COMPENSATION. See Schedule B attached.
3. EFFECTIVE DATE. This Agreement shall become effective with respect
to a Fund as of the date first written above (the "Effective Date").
4. TERM. This Agreement shall become effective on the Effective Date
and, unless earlier terminated as provided herein, shall continue as to a
particular Fund until May 31, 1996 and thereafter, if not terminated, this
Agreement shall continue automatically as to a particular Fund for successive
terms of one year; provided, that such continuance is specifically approved at
least annually (a) by the vote of a majority of those members of the Trust's
Board of Trustees who are not parties to this Agreement or interested persons of
any such party, cast in person at a meeting called for the purpose of voting on
such approval, and (b) by the vote of (i) the Trust's Board of Trustees or (ii)
a majority of the outstanding voting securities of such Fund. This Agreement is
terminable with respect to a Fund (a) if its continuance is not approved in the
manner described in this Section 4, (b) upon mutual agreement of the parties, or
(c) for "cause" (as defined below) by the party alleging cause upon the
provision of sixty days' notice. After such termination, for so long as BISYS,
with the written consent of the Trust, in fact
2
<PAGE>
continues to perform any one or more of the services contemplated by this
Agreement or any schedule or exhibit hereto, the provisions of this Agreement,
including without limitation the provisions dealing with indemnification, shall
continue in full force and effect. Compensation due BISYS and unpaid by the
Trust upon such termination shall be immediately due and payable upon and
notwithstanding such termination. BISYS shall be entitled to collect from the
Trust, in addition to the compensation described under Section 2 hereof, the
amount of all of BISYS' cash disbursements for services in connection with
BISYS' activities in effecting such termination, including without limitation,
the delivery to the Trust and/or its designees of the Trust's property, records,
instruments and documents, or any copies thereof. Subsequent to such termination
for a reasonable fee, BISYS will provide the Trust with reasonable access to any
Trust documents or records remaining in its possession.
For purposes of this Agreement, "cause" shall mean (i) willful
misfeasance, bad faith, negligence, abandonment, or reckless disregard on the
part of either party with respect to its obligations and duties set forth
herein; (ii) regulatory, administrative, or judicial action initiated against
either party with regard to the violation of any rule, regulation, order, or
law; (iii) the dissolution or liquidation of either party or other cessation of
business other than a reorganization or recapitalization of such party as an
ongoing business; (iv) financial difficulties on the part of either party which
is evidenced by the authorization or commencement of, or involvement by way of
pleading, answer, consent, or acquiescence in, a voluntary or involuntary case
under Title 11 of the United States Code, as from time to time in effect, or any
applicable law, other than said Title 11, of any jurisdiction relating to the
modification or alternation of the rights of creditors; (v) an assignment (as
that term is defined in the Investment Company Act of 1940) of this Agreement;
or (vi) any circumstance which substantially impairs the performance of either
party's obligations and duties as contemplated herein.
5. STANDARD OF CARE; INDEMNIFICATION. BISYS shall use its best efforts
to insure the accuracy of all services performed under this Agreement, but shall
not be liable to the Trust for any action taken or omitted by BISYS in the
absence of bad faith, willful misconduct or negligence. BISYS assumes no
responsibility hereunder, and shall not be liable, for any damage, loss of data,
delay or any other loss whatsoever caused by events beyond its reasonable
control. A Fund agrees to indemnify and hold harmless BISYS, its employees,
agents, directors, officers and nominees from and against any and all claims,
demands, actions and suits, whether groundless or otherwise, and from and
against any and all judgments, liabilities, losses, damages, costs, charges,
counsel fees and other expenses of every nature and character arising out of or
in any way relating to BISYS' actions taken or non-actions with respect to the
performance of services under this Agreement with respect to such Fund or based,
3
<PAGE>
if applicable, upon information, instructions or requests with respect to such
Fund given or made to BISYS by an officer of the Trust thereunto duly
authorized; provided that this indemnification shall not apply to actions or
omissions of BISYS in cases of its own willful misconduct or negligence, and
further provided that prior to confessing any claim against it which may be the
subject of this indemnification, BISYS shall give the Trust written notice of
and reasonable opportunity to defend against said claim in its own name or in
the name of BISYS.
6. HEADINGS. Paragraph headings in this Agreement are included for
convenience only and are not to be used to construe or interpret this Agreement.
7. ASSIGNMENT. This Agreement and the rights and duties hereunder shall
not be assignable with respect to a Fund by either of the parties hereto except
by the specific written consent of the other party.
8. GOVERNING LAW. This Agreement shall be governed by and provisions
shall be construed in accordance with the laws of The Commonwealth of
Massachusetts.
9. LIMITATION OF LIABILITY OF THE TRUSTEES AND SHAREHOLDERS. A copy of
the Declaration of Trust of the Trust is on file with the Secretary of The
Commonwealth of Massachusetts, and notice is hereby given that this instrument
is executed on behalf of the Trustees of the Trust as Trustees and not
individually and that the obligations of this instrument are not binding upon
any of the Trustees or Shareholders individually but are binding only upon the
assets and property of the Trust.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
THE VICTORY PORTFOLIOS
By:/s/ J. David Huber
---------------
Title: Vice President
BISYS FUND SERVICES OHIO, INC.
By:/s/ Stephen Mintos
------------------
Title: Executive Vice President
4
<PAGE>
Amended Schedule A
to the Fund Accounting Agreement
between the Victory Portfolios (formerly the Society Funds)
and BISYS Fund Services Ohio, Inc.
Dated as of May 31, 1995
Name of Portfolio
Victory Balanced Fund
Victory Diversified Stock Fund
Victory Government Mortgage
Fund Victory Growth Fund
Victory Intermediate Income Fund
Victory International Growth Fund
Victory Investment Quality Bond Fund
Victory Limited Term Income Fund
Victory Ohio Municipal Bond Fund
Victory Ohio Regional Stock Fund
Victory Prime Obligations Fund
Victory Special Growth Fund
Victory Special Value Fund
Victory Stock Index Fund
Victory Tax-Free Money Market Fund
Victory U.S. Government Obligations Fund
Victory Value Fund
Victory Financial Reserves Fund
Victory Fund for Income Fund
Victory Government Bond Fund
Victory Institutional Money Market Fund
Victory National Municipal Bond Fund
Victory New York Tax-Free Fund
Victory Ohio Municipal Money Market Fund
Victory Convertible Securities Fund
Victory Florida Tax-Free Bond Fund
Victory Municipal Bond Fund
Victory Short Term Government Income Fund
5
<PAGE>
THE VICTORY PORTFOLIOS
By:/s/ J. David Huber
--------------------------------
Title: Vice President
BISYS FUND SERVICES OHIO, INC.
By:/s/ Stephen Mintos
--------------------------------
Title: Executive Vice President
6
<PAGE>
Amended Schedule A
to the Fund Accounting Agreement
between the Victory Portfolios
and BISYS Fund Services Ohio, Inc.
Dated as of February 19, 1997
Name of Portfolio
Victory Balanced Fund
Victory Diversified Stock Fund
Victory Government Mortgage Fund
Victory Growth Fund
Victory Intermediate Income Fund
Victory International Growth Fund
Victory Investment Quality Bond Fund
Victory Lakefront Fund
Victory Limited Term Income Fund
Victory Ohio Municipal Bond Fund
Victory Ohio Regional Stock Fund
Victory Prime Obligations Fund
Victory Special Growth Fund
Victory Special Value Fund
Victory Stock Index Fund
Victory Tax-Free Money Market Fund
Victory U.S. Government Obligations Fund
Victory Value Fund
Victory Financial Reserves Fund
Victory Fund for Income
Victory Government Bond Fund
Victory Institutional Money Market Fund
Victory National Municipal Bond Fund
Victory New York Tax-Free Fund
Victory Ohio Municipal Money Market Fund
Victory Convertible Securities Fund
Victory Florida Tax-Free Bond Fund
Victory Municipal Bond Fund
Victory Short Term Government Income Fund
<PAGE>
Amended Schedule A
to the Fund Accounting Agreement
between the Victory Portfolios
and BISYS Fund Services Ohio, Inc.
Dated as of March 2, 1998
Name of Portfolio
1. Victory Balanced Fund
2. Victory Diversified Stock Fund
3. Victory Government Mortgage Fund
4. Victory Growth Fund
5. Victory Intermediate Income Fund
6. Victory International Growth Fund
7. Victory Investment Quality Bond Fund
8. Victory Lakefront Fund
9. Victory Limited Term Income Fund
10. Victory Ohio Municipal Bond Fund
11. Victory Ohio Regional Stock Fund
12. Victory Prime Obligations Fund
13. Victory Real Estate Investment Fund
14. Victory Special Growth Fund
15. Victory Special Value Fund
16. Victory Stock Index Fund
17. Victory Tax-Free Money Market Fund
18. Victory U.S. Government Obligations Fund
19. Victory Value Fund
20. Victory Financial Reserves Fund
21. Victory Fund for Income
22. Victory Institutional Money Market Fund
23. Victory National Municipal Bond Fund
24. Victory New York Tax-Free Fund
25. Victory Ohio Municipal Money Market Fund
26. Victory Federal Money Market Fund
27. Victory Convertible Securities Fund
28. Victory LifeChoice Conservative Investor Fund
29. Victory LifeChoice Growth Investor Fund
30. Victory LifeChoice Moderate Investor Fund
<PAGE>
AMENDED SCHEDULE A
TO THE FUND ACCOUNTING AGREEMENT
BETWEEN THE VICTORY PORTFOLIOS
AND BISYS FUND SERVICES OHIO, INC.
DATED AS OF MAY 29, 1998
<TABLE>
<CAPTION>
NAME OF PORTFOLIO
<S> <C>
1. Victory Balanced Fund 26. Victory Federal Money Market Fund
2. Victory Diversified Stock Fund 27. Victory Convertible Securities Fund
3. Victory Government Mortgage Fund 28. Victory LifeChoice Conservative Investor Fund
4. Victory Growth Fund 29. Victory LifeChoice Growth Investor Fund
5. Victory Intermediate Income Fund 30. Victory LifeChoice Moderate Investor Fund
6. Victory International Growth Fund 31. Victory Maine Municipal Bond Fund (Intermediate)
7. Victory Investment Quality Bond Fund 32. Victory Maine Municipal Bond Fund (Short-
8. Victory Lakefront Fund Intermediate)
9. Victory Limited Term Income Fund 33. Victory Michigan Municipal Bond Fund
10. Victory Ohio Municipal Bond Fund 34. Victory Equity Income Fund
11. Victory Ohio Regional Stock Fund 35. Victory National Municipal Bond Fund (Long)
12. Victory Prime Obligations Fund 36. Victory National Municipal Bond Fund (Short-
13. Victory Real Estate Investment Fund Intermediate)
14. Victory Special Growth Fund
15. Victory Special Value Fund
16. Victory Stock Index Fund
17. Victory Tax-Free Money Market Fund
18. Victory U.S. Government Obligations Fund
19. Victory Value Fund
20. Victory Financial Reserves Fund
21. Victory Fund for Income
22. Victory nstitutional Money Market Fund
23. Victory National Municipal Bond Fund
24. Victory New York Tax-Free Fund
25. Victory Ohio Municipal Money Market Fund
</TABLE>
<PAGE>
Schedule B
VICTORY PORTFOLIOS
BISYS FUND SERVICES OHIO, INC.
Date as of May 31, 1995
Fund accounting fees will be determined based on a combination of asset-based
charges (subject to minimums), transaction charges, and out-of-pocket expenses.
Asset-based fees are accrued daily upon average total net assets of a Fund.
Asset charges per Fund - Annually
Net Assets Amounts
First $100 Million .03%
Next $100 Million .02%
Over $200 Million .01% for all Funds other than
money market Fund; money market
Fund will have no incremental
asset charge when net assets
exceed $500 million ($80,000
asset charge cap for each money
market Fund)
Minimum Monthly Asset Charge
The above charge will be subject to a minimum monthly amount of $2,500
per taxable Fund, $2,917 per tax-free Fund, and $3,333 per
international Fund.
Transaction Charges per Fund
$5 per security transaction (including foreign exchanges, patents,
corporate actions, and margin payments).
Multiple Class Charges
A $833 per month charge will be assessed for each class of shares after
the first class. This is separate from and in addition to other charges
and the minimum charge.
Out-of-Pocket Expenses
Out-of-pocket expenses incurred on behalf of the Fund will
be billed monthly and include, but not limited to:
o Payment to pricing or corporate actions vendors
o Costs in obtaining prices for non-exchange traded
securities
o Postage and communication (wires, modem fees)
o Courier expenses
o Microfilming, archiving, etc.
7
<PAGE>
THE VICTORY PORTFOLIOS
By:/s/ J. David Huber
--------------------------------
Title: Vice President
BISYS FUND SERVICES OHIO, INC.
By:/s/ Stephen Mintos
--------------------------------
Title: Executive Vice President
8
<PAGE>
Schedule B (Additional)
to the Fund Accounting Agreement
between The Victory Portfolios (LifeChoice Funds)
and BISYS Fund Services Ohio, Inc.
Dated as of March 2, 1998
Fund accounting fees will be determined based on a combination of
asset-based charges (subject to minimums), transaction charges, and
out-of-pocket expenses. Asset-based fees are accrued daily upon average total
net assets of a Fund.
Asset charges per Fund - Annually
Net Assets Amounts
First $100 Million .02%
Over $100 Million .01% (60,000 asset charge cap
for each LifeChoice Fund)
Minimum Monthly Asset Charge
The above charge will be subject to a minimum monthly amount of
$1,666.66 per taxable Fund.
Transaction Charges per Fund
$5 per security transaction (including foreign exchanges, patents,
corporate actions, and margin payments).
Multiple Class Charges
A $833 per month charge will be assessed for each class of shares after
the first class. This is separate from and in addition to other charges
and the minimum charge.
Out-of-Pocket Expenses
Out-of-pocket expenses incurred on behalf of the Fund will
be billed monthly and include, but not limited to:
o Payment to pricing or corporate actions vendors
o Costs in obtaining prices for non-exchange traded
securities
o Postage and communication (wires, modem fees)
o Courier expenses
o Microfilming, archiving, etc.
THE VICTORY PORTFOLIOS
SHAREHOLDER SERVICING PLAN
This Shareholder Servicing Plan (the "Plan") is adopted by The Victory
Portfolios, a business trust organized under the laws of the Commonwealth of
Massachusetts (the "Company"), on behalf of each of its Funds (individually, a
"Fund," and collectively, the "Funds") as set forth in Schedule I, as amended
from time to time, subject to the following terms and conditions:
SECTION 1. ANNUAL FEES.
Shareholder Services Fee. Each Fund (or Class thereof, as the case may
be) may pay to the distributor of its shares (the "Distributor") or financial
institutions that provide certain services to the Funds, a shareholder services
fee under the Plan at an annual rate not to exceed 0.25% of the average daily
net assets of the Fund or Class attributable to the Distributor or financial
institution thereof (the "Services Fee").
Adjustment to Fees. Any Fund may pay a Services Fee to the Distributor
or financial institution at a lesser rate than the fees specified in Section 1
hereof as agreed upon by the Board of Trustees and the Distributor or financial
institution and approved in the manner specified in Section 3 of this Plan.
Payment of Fees. The Services Fees will be calculated daily and paid
monthly by each Fund at the annual rates indicated above.
SECTION 2. EXPENSES COVERED BY THE PLAN.
Services Fees may be used by the Distributor or financial institution
for payments to financial institutions and persons who provide administrative
and support services to their customers who may from time to time beneficially
own shares, which may include (i) establishing and maintaining accounts and
records relating to shareholders; (ii) processing dividend and distribution
payments from the Fund on behalf of shareholders; (iii) providing information
periodically to shareholders showing their positions in shares and integrating
such statements with those of other transactions and balances in shareholders'
other accounts serviced by such financial institution; (iv) arranging for bank
wires; (v) responding to shareholder inquiries relating to the services
performed; (vi) responding to routine inquiries from shareholders concerning
their investments; (vii) providing subaccounting with respect to shares
beneficially owned by shareholders, or the information to the Fund necessary for
subaccounting; (viii) if required by law, forwarding shareholder communications
from the Fund (such as proxies, shareholder reports, annual and semi-annual
financial statements and dividend, distribution and tax notices) to
shareholders; (ix) assisting in processing purchase, exchange and redemption
requests from shareholders and in placing such orders with our
<PAGE>
service contractors; (x) assisting shareholders in changing dividend options,
account designations and addresses; (xi) providing shareholders with a service
that invests the assets of their accounts in shares pursuant to specific or
pre-authorized instructions; and (xii) providing such other similar services as
the Fund may reasonably request to the extent the Distributor or financial
institution is permitted to do so under applicable statutes, rules and
regulations.
SECTION 3. APPROVAL OF TRUSTEES.
Neither the Plan nor any related agreements will take effect until
approved by a majority of both (a) the full Board of Trustees of the Company and
(b) those Trustees who are not interested persons of the Company and who have no
direct or indirect financial interest in the operation of the Plan or in any
agreements related to it (the "Qualified Trustees"), cast in person at a meeting
called for the purpose of voting on the Plan and the related agreements.
SECTION 4. CONTINUANCE OF THE PLAN.
The Plan will continue in effect until June 5, 1996, and thereafter for
successive twelve-month periods: provided, however, that such continuance is
specifically approved at least annually by the Trustees of the Fund and by a
majority of the Qualified Trustees.
SECTION 5. TERMINATION.
The Plan may be terminated at any time with respect to a Fund (i) by
the Company without the payment of any penalty, by the vote of a majority of the
outstanding voting securities of the Fund (or, the shareholders of a particular
class, if applicable) or (ii) by a vote of the Qualified Trustees. The Plan may
remain in effect with respect to a Fund even if the Plan has been terminated in
accordance with this Section 5 with respect to any other Fund.
SECTION 6. AMENDMENTS.
No material amendment to the Plan may be made unless approved by the
Company's Board of Trustees in the manner described in Section 3 above.
SECTION 7. SELECTION OF CERTAIN TRUSTEES.
While the Plan is in effect, the selection and nomination of the
Company's Trustees who are not interested persons of the Fund will be committed
to the discretion of the Trustees then in office who are not interested persons
of the Company.
2
<PAGE>
SECTION 8. WRITTEN REPORTS.
In each year during which the Plan remains in effect, a person
authorized to direct the disposition of monies paid or payable by a Fund
pursuant to the Plan or any related agreement will prepare and furnish to the
Company's Board of Trustees, and the Board will review, at least quarterly,
written reports complying with the requirements of the Rule which set out the
amounts expended under the Plan and the purposes for which those expenditures
were made.
SECTION 9. PRESERVATION OF MATERIALS.
The Company will preserve copies of the Plan, any agreement relating to
the Plan and any report made pursuant to Section 8 above, for a period of not
less than six years (the first two years in an easily accessible place) from the
date of the Plan, agreement or report.
SECTION 10. LIMIT OF LIABILITY.
The limitation of shareholder liability set forth in the Company's
Declaration of Trust is hereby acknowledged. The obligations of the Company
under this Plan, if any, shall not be binding upon the Trustees individually or
upon holders of shares of the Company individually but shall be binding only
upon the assets and property of the Company, and upon the Trustees insofar as
they hold title thereto.
SECTION 11. MEANINGS OF CERTAIN TERMS.
As used in the Plan, the terms "interested person" and "majority of the
outstanding voting securities" will be deemed to have the same meaning that
those terms have under the 1940 Act by the Securities and Exchange Commission.
IN WITNESS WHEREOF, the Company executed this Plan as of June 5, 1995.
The Victory Portfolios
By:/s/ Leigh A. Wilson
--------------------
President
3
<PAGE>
SCHEDULE I
This Shareholder Servicing Plan shall be adopted with respect to the
following Funds (and Classes) of The Victory Portfolios:
Name of Fund Class
- ------------ -----
The Victory Balanced Fund A/B
The Victory Diversified Stock Fund A/B
The Victory Government Mortgage Fund A
The Victory Growth Fund A
The Victory Intermediate Income Fund A
The Victory International Growth Fund A/B
The Victory Investment Quality Bond Fund A
The Victory Limited Term Income Fund A
The Victory Ohio Municipal Bond Fund A
The Victory Ohio Regional Stock Fund A/B
The Victory Prime Obligations Fund A
The Victory Special Value Fund A/B
The Victory Tax-Free Money Market Fund A
The Victory U.S. Government Obligations
Money Market Fund Service
The Victory Value Fund A
The Victory Stock Index Fund A
The Victory Fund for Income A
The Victory Government Bond Fund A/B
The Victory National Municipal Bond Fund A/B
The Victory New York Tax-Free Fund A/B
The Victory Ohio Municipal Money Market Fund A
The Victory Special Growth Fund A
The Victory Institutional Money Market Fund Service
<PAGE>
SCHEDULE I
Amended as of March 1, 1997
This Shareholder Servicing Plan shall be adopted with respect to the
following Funds (and Classes) of The Victory Portfolios:
Name of Fund Class
- ------------ -----
1. The Victory Balanced Fund A/B
2. The Victory Diversified Stock Fund A/B
3. The Victory Government Mortgage Fund A
4. The Victory Growth Fund A
5. The Victory Intermediate Income Fund A
6. The Victory International Growth Fund A/B
7. The Victory Investment Quality Bond Fund A
8. The Victory Limited Term Income Fund A
9. The Victory Ohio Municipal Bond Fund A
10. The Victory Ohio Regional Stock Fund A/B
11. The Victory Prime Obligations Fund A
12. The Victory Special Value Fund A/B
13. The Victory Tax-Free Money Market Fund A
14. The Victory U.S. Government Obligations Fund Select Shares
15. The Victory Value Fund A
16. The Victory Stock Index Fund A
17. The Victory Fund for Income A
18. The Victory Government Bond Fund A/B
19. The Victory National Municipal Bond Fund A/B
20. The Victory New York Tax-Free Fund A/B
21. The Victory Ohio Municipal Money Market Fund A
22. The Victory Special Growth Fund A
23. The Victory Institutional Money Market Fund Select Shares
24. The Victory Lakefront Fund A
25. The Victory Real Estate Investment Fund A
<PAGE>
SCHEDULE I
Amended as of March 2, 1998
- --------------------------------------------------------------------------------
1. Victory Balanced Fund 26. Victory Federal Money Market Fund
Class A Shares Investor Shares
Class B Shares Select Shares
Key Shares 27. Victory Convertible Securities Fund
2. Victory Diversified Stock Fund 28. Victory LifeChoice Conservative
Class A Shares Investor Fund
Class B Shares 29. Victory LifeChoice Growth
3. Victory Government Mortgage Fund Investor Fund
4. Victory Growth Fund 30. Victory LifeChoice Moderate
5. Victory Financial Reserves Fund Investor Fund
6. Victory Fund for Income
7. Victory Institutional Money Market Fund
Investor Shares
Select Shares
8. Victory Intermediate Income Fund
9. Victory International Growth Fund
Class A Shares
Class B Shares
10. Victory Investment Quality Bond Fund
11. Victory Lakefront Fund
12. Victory Limited Term Income Fund
13. Victory National Municipal Bond Fund
Class A Shares
Class B Shares
14. Victory New York Tax-Free Fund
Class A Shares
Class B Shares
15. Victory Ohio Municipal Bond Fund
16. Victory Ohio Municipal Money Market Fund
17. Victory Ohio Regional Stock Fund
Class A Shares
Class B Shares
18. Victory Prime Obligations Fund
19. Victory Real Estate Investment Fund
20. Victory Special Growth Fund
21. Victory Special Value Fund
Class A Shares
Class B Shares
22. Victory Stock Index Fund
23. Victory Tax-Free Money Market Fund
24. Victory U.S. Government Obligations Fund
Investor Shares
Select Shares
25. Victory Value Fund
- --------------------------------------------------------------------------------
<PAGE>
SCHEDULE I
Amended as of May 29, 1998
<TABLE>
<S> <C>
1. Victory Balanced Fund 26.Victory Federal Money Market Fund
Class A Shares Investor Shares
Class B Shares Select Shares
2. Victory Diversified Stock Fund 27.Victory Convertible Securities Fund
Class A Shares 28.Victory LifeChoice Conservative Investor Fund*
Class B Shares 29.Victory LifeChoice Growth Investor Fund*
3. Victory Government Mortgage Fund 30.Victory LifeChoice Moderate Investor Fund*
4. Victory Growth Fund 31.Victory Maine Municipal Bond Fund
5. Victory Financial Reserves Fund (Intermediate)
6. Victory Fund for Income 32.Victory Maine Municipal Bond Fund
7. Victory Institutional Money Market Fund (Short-Intermediate)
Investor Shares 33.Victory Michigan Municipal Bond Fund
Select Shares 34.Victory Equity Income Fund
8. Victory Intermediate Income Fund 35.Victory National Municipal Bond Fund (Long)
9. Victory International Growth Fund 36.Victory National Municipal Bond Fund
Class A Shares (Short-Intermediate)
Class B Shares
10.Victory Investment Quality Bond Fund
11.Victory Lakefront Fund
12.Victory Limited Term Income Fund
13.Victory National Municipal Bond Fund
Class A Shares
Class B Shares
14.Victory New York Tax-Free Fund
Class A Shares
Class B Shares
15.Victory Ohio Municipal Bond Fund
16.Victory Ohio Municipal Money Market Fund
17.Victory Ohio Regional Stock Fund
Class A Shares
Class B Shares
18.Victory Prime Obligations Fund
19.Victory Real Estate Investment Fund
20.Victory Special Growth Fund
21.Victory Special Value Fund
Class A Shares
Class B Shares
22.Victory Stock Index Fund
23.Victory Tax-Free Money Market Fund
24.Victory U.S. Government Obligations Fund
Investor Shares
Select Shares
25.Victory Value Fund
</TABLE>
* Although these funds have been approved for the Plan, no fees are taken for
the LifeChoice Funds.
[LETTERHEAD OF KRAMER, LEVIN, NAFTALIS & FRANKEL]
July 29, 1998
The Victory Portfolios
3435 Stelzer Road
Columbus, Ohio 43219
Re: The Victory Portfolios
File No. 33-8982
Post-Effective Amendment
to Registration Statement on Form N-1A
--------------------------------------
Dear Gentlemen:
We hereby consent to the reference of our firm as counsel in
Post-Effective Amendment No. 42 to the Registration Statement on Form N-1A.
Very truly yours,
/s/Kramer, Levin, Naftalis & Frankel
------------------------------------
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the reference to our Firm under the caption "Independent
Accountants" in the Prospectuses and in the Statement of Additional Information
incororated by reference in this Post-Effective Amendment No. 42 to the
Registration Statement of The Victory Portfolios on Form N-1A (File No.
33-8982).
/s/PricewaterhouseCoopers LLP
-----------------------------
PricewaterhouseCoopers LLP
Columbus, Ohio
July 29, 1998
THE VICTORY PORTFOLIOS
DISTRIBUTION
AND SERVICE PLAN
1. This Distribution and Services Plan (the "Plan") when effective in
accordance with its terms, shall be the written plan contemplated by Rule 12b-1
under the Investment Company Act of 1940 (the "1940 Act") of each of the Funds
set forth on Schedule I (individually, a "Fund" and collectively, the "Funds")
as amended from time to time, each a duly established series of shares of The
Victory Portfolios, a Massachusetts Business Trust, registered as an open-end
investment company under the 1940 Act (the "Company").
2. The Company has entered into a separate Administration Agreement and
Distribution Agreement with respect to each Fund, under which the Distributor
uses all reasonable efforts, consistent with its other business, to secure
purchasers for each Fund's shares of beneficial interest ("shares"). Under the
Distribution Agreement, the Distributor pays, among other things, the expenses
of printing and distributing any prospectuses, reports and other literature used
by the Distributor, advertising, and other promotional activities in connection
with the offering of shares of the Fund for sale to the public. The Company has
entered into separate Investment Advisory Agreements with the party listed
opposite each Fund or Schedule I hereto (the "Investment Adviser"). It is
understood that the Administrator may reimburse the Distributor for these
expenses from any source available to it, including the administration fee paid
to the Administrator by the Funds.
3. The Investment Adviser, or any subadviser, may, subject to the
approval of the Trustees, make payments to third parties who render shareholder
support services, including but not limited to, answering routine inquiries
regarding the Funds, processing shareholder transactions and providing such
other shareholder and administrative services as the Company may reasonably
request.
4. The Funds will not make separate payments as a result of this Plan
to the Investment Adviser, Administrator, Distributor or any other party, it
being recognized that the Funds presently pay, and will continue to pay, an
investment advisory fee to the Investment Adviser and an administration fee to
the Administrator. To the extent that any payments made by any Fund to the
Investment Adviser or Administrator, including payment of fees under the
Investment Advisory Agreement or the Administration Agreement, respectively,
should be deemed to be indirect financing of any activity primarily intended to
result in the sale of shares of the Fund within the context of Rule 12b-1 under
the 1940 Act, then such payments shall be deemed to be authorized by this Plan.
<PAGE>
5. This Plan shall become effective upon the first business day of the
month following approval by a vote of at least a "majority of the outstanding
voting securities of each Fund" (as defined in the 1940 Act), the Plan having
been approved by a vote of a majority of the Trustees of the Company, including
a majority of Trustees who are not interested persons of the Company (as defined
in the 1940 Act) and who have no direct or indirect financial interest in the
operation of this Plan or in any agreements related to this Plan (the
"Independent Trustees"), cast in person at a meeting called for the purpose of
voting on this Plan.
6. This Plan shall, unless terminated as hereinafter provided, remain
in effect from the date specified above until June 5, 1996, and from year to
year thereafter, provided, however, that such continuance is subject to approval
annually by a vote of a majority of the Trustees of the Company, including a
majority of the Independent Trustees, cast in person at a meeting called for the
purpose of voting on this Plan. This Plan may be amended at any time by the
Board of Trustees, provided that (a) any amendment to authorize direct payments
by each Fund to finance any activity primarily intended to result in the sale of
shares of the Funds, to increase materially the amount spent by the Funds for
distribution, or any amendment of the Investment Advisory Agreement or the
Administration Agreement to increase the amount to be paid by any Fund
thereunder shall be effective only upon approval by a vote of a majority of the
outstanding voting securities of the Fund, and (b) any material amendments of
this Plan shall be effective only upon approval in the manner provided in the
first sentence in this paragraph.
7. This Plan may be terminated at any time, without the payment of any
penalty, by vote of a majority of the Independent Trustees or by a vote of a
majority of the outstanding voting securities of each Fund.
8. During the existence of this Plan, the Trust shall require the
Investment Adviser and/or Distributor to provide the Company, for review by the
Company's Board of Trustees, and the Trustees shall review, at least quarterly,
a written report of the amounts expended in connection with financing any
activity primarily intended to result in the sale of shares of the Funds (making
estimates of such costs where necessary or desirable) and the purposes for which
such expenditures were made.
9. This Plan does not require the Investment Adviser or Distributor to
perform any specific type or level of distribution activities or to incur any
specific level of expenses for activities primarily intended to result in the
sale of shares of the Funds.
10. Consistent with the limitation of shareholder and Trustee liability
as set forth in the Company's Declaration of Trust, any obligations assumed by a
Fund pursuant to this Plan
2
<PAGE>
and any agreements related to this Plan shall be limited in all cases to each
Fund individually, and the assets of each Fund individually, and shall not
constitute obligations of any shareholder or other series or classes of shares
of the Company or of any Trustee.
11. If any provision of this Plan shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Plan shall not
be affected thereby.
IN WITNESS WHEREOF, the Company has executed this Plan on behalf of
each Fund listed on Schedule I, individually and not jointly, as of June 5,
1995.
THE VICTORY PORTFOLIOS
By:/s/ Leigh A. Wilson
-------------------
3
<PAGE>
SCHEDULE I
Amended as of March 1, 1997
This Distribution Plan shall be adopted with respect to Class A shares
of the following Funds of The Victory Portfolios:
Government Bond Fund
National Municipal Bond Fund
New York Tax-Free Fund
This Distribution Plan shall be adopted with respect to the following
Funds of The Victory Portfolios:
Fund For Income Fund
Financial Reserves Fund
Institutional Money Market Fund
(Select Class and Investor Class)
Lakefront Fund
Ohio Municipal Money Market Fund
Real Estate Investment Fund
<PAGE>
SCHEDULE I
Amended as of February 19, 1997
The Distribution Plan shall be adopted with respect to the Shares of
the following Funds of The Victory Portfolios:
- --------------------------------------------------------------------------------
Victory Financial Reserves Fund
Victory Fund for Income
Victory Government Bond Fund
Class A Shares
Victory Institutional Money Market Fund
Investor Shares
Select Shares
Victory Lakefront Fund
Victory National Municipal Bond Fund
Class A Shares
Victory New York Tax-Free Fund
Class A Shares
Victory Ohio Municipal Money Market Fund
Victory Real Estate Investment Fund
- --------------------------------------------------------------------------------
<PAGE>
SCHEDULE I
Amended as of March 2, 1998
The Distribution Plan shall be adopted with respect to the Shares of
the following Funds of The Victory Portfolios:
- --------------------------------------------------------------------------------
1. Victory Financial Reserves Fund 9. Victory Federal Money MarketFund
2. Victory Fund for Income Investor Shares
3. Victory Institutional Money Market Fund Select Shares
Investor Shares 10. Victory Convertible Fund
Select Shares 11. Victory LifeChoice Conservative
4. Victory Lakefront Fund Investor Fund
5. Victory National Municipal Bond Fund 12. Victory LifeChoice Growth
Class A Shares Investor Fund
6. Victory New York Tax-Free Fund 13. Victory LifeChoice Moderate
Class A Shares Investor Fund
7. Victory Ohio Municipal Money Market Fund
8. Victory Real Estate Investment Fund
- --------------------------------------------------------------------------------
<PAGE>
SCHEDULE I
Amended as of May 29, 1998
This Distribution Plan shall be adopted with respect to the Shares of
the following Funds of The Victory Portfolios:
<TABLE>
<CAPTION>
<S> <C>
1. Victory Financial Reserves Fund 9. Victory Federal Money Market Fund
2. Victory Fund for Income Investor Shares
3. Victory Institutional Money Market Fund Select Shares
Investor Shares 10. Victory Convertible Securities Fund
Select Shares 11. Victory LifeChoice Conservative Investor Fund
4. Victory Lakefront Fund 12. Victory LifeChoice Growth Investor Fund
5. Victory National Municipal Bond Fund 13. Victory LifeChoice Moderate Investor Fund
Class A Shares 14. Victory Maine Municipal Bond Fund (Intermediate)
6. Victory New York Tax-Free Fund 15. Victory Maine Municipal Bond Fund
Class A Shares (Short-Intermediate)
7. Victory Ohio Municipal Money Market Fund 16. Victory Michigan Municipal Bond Fund
8. Victory Real Estate Investment Fund 17. Victory Equity Income Fund
18. Victory National Municipal Bond Fund (Long)
19. Victory National Municipal Bond Fund
(Short-Intermediate)
</TABLE>
